One lesson I learned this past year, after setting financial goals for 2008 and evaluating my progress as of last week, is that I shouldn’t set goals that are heavily dependent upon forces beyond my control, such as the stock market at large. My main target of a $210,000 “modified net worth” assumed the stock market would not perform so poorly. There’s that idiom about assumptions.
I’ll take a slightly different approach with my financial targets for 2009.
Financial goals for 2009
Last year, I looked past my day job salary towards the income from my side jobs, including Consumerism Commentary. My target for 2009 was to earn $100,000 from a variety of sources outside of my primary job. I succeeded, with an official tally of $121,000. I’d like to see this year-over-year increasing trend continue, but again I need to look at the market.
Most of this income comes from advertisers, and many of these advertisers are financial companies. I don’t have to look hard to find news stories about the troubles facing companies in the financial sector. In addition, experts are predicting a slow year for internet advertising across all sectors. While a year ago I was considering following some of my blogging colleagues by quitting my day job and pursuing blogging and related projects full-time. This is a luxury I’d like to have, but I’m still playing it conservatively. As long as I can continue to basically work full time with two jobs without losing more of my sanity, I’ll do so.
My goal for “Other Earned Income” in 2009 is $108,000, or an average $9,000 per month. My stretch goal is to surpass this year’s success with $132,000.
My investing progress for 2008 was haphazard and unorganized. I’d like to be more clear in 2009 about achieving investing targets. This is what I’d like to accomplish by year end (or by the time I file my 2009 tax return in April 2010). The ability to reach these goals depends on earning the “Other Earned Income” I’ve indicated as my goal.
- Contribute the full $16,500 to my 401(k).
- Contribute the maximum to a Roth IRA if possible; if not, contribute to a Traditional IRA and convert the account to a Roth IRA in 2010.
- Contribute the maximum to an SEP IRA.
- Invest $250 per month into an account to help pay for future children’s education.
According to my year-end balance sheet, I currently have over $80,000 in various savings accounts and money market funds. I have a sinking feeling that a good portion of this is earmarked for the IRS. I’m working on finding a tax accountant to ensure that my tax bill isn’t any higher than it is supposed to be. After I pay my taxes, I’d like to take half of whatever I have left and earmark that amount for a down payment on a house.
Last year, I made the mistake of setting a goal for my total “modified net worth.” I failed thanks to poor performance in my investments. Had I moved my investments to something safer than stocks at the first sign of trouble, I may have been able to make my goal. By doing so, I would be reacting to short-term indicators. Had I sold off stocks and bought safer bonds, I might have achieved a positive return on my investments and surpassed my 2008 goals. Staying invested in stocks was the right choice for my investments that won’t be tapped for a few decades.
For 2009, I will not set a net worth target. It is more meaningful to focus on my income and keep my spending in check.
Throughout the year, I will occasionally compare my progress against these goals. I have fewer goals this year, and the ones that I am keeping are the most meaningful, measurable, and mostly within my control.
What are your financial goals for 2009?