Now that the halfway mark of 2009 has passed by, it wouldn’t hurt to review the financial mini-goals I set for myself at the beginning of the year and determine how far I have strayed from my path. For me, these goals are only milestones. They help my gauge my progress but numbers in my bank account have little correlation to my quality of life and do not have much bearing on my non-monetary, real goals.
Last year, my success at reaching arbitrary financial milestones was hindered by the stock market, so when I set my goals for 2009, I focused on metrics that are not affected by short-term investment performance.
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.
“Other Earned Income” refers to the gross revenue (before subtracting expenses) derived from running a number of websites, most notably Consumerism Commentary. I don’t write much about how I earn money through these websites because I feel it is too introspective to publish. It would be like writing a book about writing that book or singing a song about singing that song. There is a market for self-referential writing, but I’m not particularly interested in writing about the minutiae of blogging. Consumerism Commentary is a blog about money, not a blog about blogging.
Anyway, according to my June financial reports, I am on target to meet my target as long as I maintain about $4,000 Other Earned Income per month for the rest of the year. Barring any unforeseen problems, this is achievable, but mostly due to significant income earned earlier this year. To meet my stretch goal, I would have to earn an average of more than $8,000 each month for the rest of the year. That is less likely as I expect the remainder of the year will look more like May than March.
- 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 most recent pay stub, I have transferred $8,836 to my 401(k), split evenly between “Before-tax” and “Roth” contributions. It seems I may overshoot my goal, so I will make sure to adjust my contributions to prevent my 401(k) from hitting the maximum early, reducing the amount of employer match I receive.
I have not yet contributed to my 2009 IRAs yet, although this might be a good time to do so. Usually I want until the tax deadline, but with the stock market hitting lows again, I should consider starting my IRAs now.
Although I set a goal to invest $250 per month for the education expenses for a theoretical future child or children, I have not done this. My internal debate is whether to start the fund now and get a head start or to wait until I plan on having children, reducing the risk of being penalized for withdrawing the funds at some future date without education expenses to cover.
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.
Through 2009 so far, my savings progress has been strong. I do not think I specifically earmarked half of my remaining savings on April 15 for a future home purchase, but I have been paying attention to my “Orange House Fund.” No, I do not particularly plan on purchasing a house colored orange; “orange” refers to the fact that this bank account is housed at ING Direct, a bank that has claimed orange as its color. The fund currently sits at about $13,000, and I add money occasionally.
If I need to buy a house in a hurry, I could draw from a number of other accounts to come up with 20 percent of a reasonably priced house in this area. I tend to distribute leftover income to a variety of goal-based savings accounts, and a house is only one of these.
I did not set a net worth target for 2009 as this number is pulled in different directions by the stock market, something over which I have very little (that is, zero) effect. My investing strategy is to stay invested in the stock market for all assets other than cash I might need in a few years, so as time goes by, my net worth is driven increasingly by the performance of stocks.
How are you progressing against your goals?
Updated June 16, 2011 and originally published July 8, 2009.