Our Financial Goals for 2010

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A quick recap and note on our 2009 goals

Although our personal finance miracle did not come to light the way we had envisioned it, we are so blessed and are making excellent progress on debt repayment and savings.

We repaid nearly $9,000 in debt, saved nearly $6,300 (amongst all savings accounts), and build a decent side hustle income.  All in all things went fantastically.

Barring some sort of enormously expensive and unforeseen event… we will make tremendous progress on our debt repayment in 2010.  Here is the breakdown of what we hope to accomplish.

Remaining Debt going into 2010

The 5 debts we have remaining now are:

  1. Lending Club at $6,544.29
  2. 2nd Mortgage at $39,917.39
  3. Student Loan 1 at $31,426.92
  4. Student Loan 2 at $34,470.73
  5. 1st Mortgage at $119,392.58

This is the order of repayment.  It is a blended method that I devised by crunching the numbers between both the debt snowball method and the highest interest first method.

Financial Goal 1:  2010 Lending Club Debt Goal

Unless this is your first visit to Debt Free Adventure, you are probably aware of the fact that we consolidated our high interest debt through Lending Club and are set to save $500+ by doing so. If you are interested in doing something similar for your situation read my advice on debt consolidation and my Lending Club review.

At the onset of 2010 our Lending Club debt sits at a balance of $6,544.29.  Goal numero uno is to pay this off ASAP.  It is looking as though we will be able to pay this off by March and can then shift our focus to goal number two… paying down our 2nd mortgage.

Financial Goal 2:  2010 2nd Mortgage Debt Goal

We are making our 2nd mortgage financial debt goal number two because the interest on it is much higher than the interest on either of our student loans and after crunching the numbers… paying this debt off next is our best route.

We hope to reduce the 2nd mortgage by at least $20,000 so when 2011 hits we have this debt reduced by more than half.

If you read back through our Monthly Debt Reduction and Savings Statements you will see that we have been paying double principal payments on this debt for most of 2009.  The principal amount was only around $25, so doubling it was a no brainer.

Financial Goal 3:  Emergency Fund Goal for 2010

You may be familiar with my 75/25 Method of Debt Repayment and Emergency Fund Savings.  It basically says to put 75% of your cash flow toward debt reduction and 25% toward savings.  We go back and forth on always pay yourself at least something and switching into gazelle intensity mode.  The answer to that is never a simple black and white answer, so rather than trying to make it so we do what is right for our situation as it changes.

For our current situation $3,000 is equivalent to one months expenses and is enough of a support cushion for us.  We will finally be capping our EF savings at this amount, and barring any huge financial changes, will keep it there until all our non-1st mortgage debt is paid off.

Our emergency fund currently sits at $2,449 so we are close to reaching this goal and are allotting $100/month until it hits $3,000, which should happen in July.

Financial Goal 4:  Side Hustle Goal for 2010

My side hustle is currently earning us around $1,000/month and is growing steadily each month.  My goal for the end of 2010 is to have this earning $5,000/month.

My wife also has an idea for her own side hustle and our goal for that is to simply get it off the ground and operational in 2010.  I may or may not be exposing what this is but will be reporting any income it brings in.

In Summary

We are very excited to by paying off our Lending Club loan soon and feel very good about having a 1 month expenses cushion.  Sure we would rather have more of a cushion, but that will come to pass later once we have all other non-1st mortgage debt repaid.  We have caught the vision of income diversification and are trying to develop income from our passions and gifts.  We are looking at 2010 as the year to bring our entrepreneurial visions to the forefront so we have solid income to fall back on if either of us lose our jobs (after all, we do live in Michigan!)

If our side hustles do develop into more substantial earnings, then our debt reduction goals will be surpasses as we put the majority of any side income toward existing debt.

What about you?  What are you financial goals for 2010?

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1 Laura@nomorespending

Good luck Matt. Your side hustle income is great and I’m sure with the hard work you put in, it will grow and grow.

2 Matt Jabs

Thank you Laura… that is the plan, we’ll see what happens over the course of this year! 🙂

3 Mchelle Traudt

We will also be working on reducing a lot of debt this year. That is our main goal. We will also be focusing on saving money and spending less so that we can put extra money towards our debt. We will also be exploring other ways to make money. Thanks for the motivation!

4 Matt Jabs

Michelle: Do not quit… keep at it, we can always motivate each other! Few things feel better than paying off debt! 🙂

5 Mike Piper

Just thinking out loud here…

I’ve been pondering this topic myself. Oddly enough (for a personal finance writer anyway), I’ve decided not to set any financial goals for 2010.

By way of explanation: Imagine that somebody with a full-time job maxes out both their IRA and 401k contributions for the year. Great job! But what if the market goes down? It’s possible that their net worth decreased even though they did a great job saving/investing.

So it would probably make more sense for that person to set their goals (and judge their success) as a function of IRA/401k contributions. They can’t control what the market does. They can only control how (and how much) they invest.

That’s how my income works right now.

There are several things I can do to increase the likelihood of my income going up. But at the same time, there are several factors over which I have no control that will have just as big of an impact.

So it would seem silly to set any specific income goal (or, therefore, a savings goal). Instead, I’ve opted to set work goals: “write X posts per week” and things of that nature.

We’ll see how it goes! 🙂

6 Matt Jabs

Excellent point regarding the IRA/401k contributions. Especially from a long-term investing perspective it would be silly to set % increase or amount increase goals.

Per your labor, I suppose as long as you can directly correlate your labor increase with earnings increase, then you should be all set.

My non-financial goals include much of what you elude to here. One of my biggies for 2010 is to become MUCH more efficient with my labor time. I plan on employing the 80/20 rule along with the a,b,c priority system to try and trim the fat so to speak. I would like to accomplish more in less time, and I think it is a very tangible goal at this point.

7 Lakita

Great job Matt! I love the transparency and accountability!

My goals are:
– Pay off last credit card by late April (approx $4,500 @ 0% interest)
– EF at least $3K
– Pay off stupid car note by the end of 2010
– Increase cash flow with “side hustles” (no quantitative goal set yet)

8 Mrs. Money

My goals are here: http://ultimatemoneyblog.com/2010-financial-goals

I ultimately want to pay off our car loan this year. That is the biggest one!

9 Evan

Are your jobs that secure? I couldn’t imagine just having 1 month’s expenses as an emergency fund.

10 Matt Jabs

Great question Evan,

No, I never view our jobs as “that secure.” However, our funds are limited so we have to prioritize what we accomplish.

According to the numbers it makes WAY more sense for us to reduce debt than to build up liquid, low-interest savings. So… we build up enough to make us feel comfortable enough to drive all our efforts toward our debt while still doing what we can for emergencies.

Dave Ramsey gives a general rule of saving $1,000 then attacking debt – for us $3,000 was a more realistic number to start from. Once our non-1st mortgage debt is gone we will build our Emergency Fund up to 6 months or $18,000.

11 Evan

Do what works for you, and I get the math against saving while there is that higher interest debt, but why is it all or none? Why not debt repayment at 75% and savings at 25%?

It is all moot if you are comfortable with 1 month’s expenses.

12 Matt Jabs

Another great question Evan, as this is a topic I have struggled with all year. I hate not paying myself at least something – absolutely hate it. However, when I do the math I can make much faster progress and stand to come out ahead on all fronts if I pour 100% of my extra cash flow toward debt repayment.

The $3,000 is a good amount for a cushion, and if we need more than that we can utilize the $1,200 average monthly extra at that point. But honestly I do not see us needing anymore than $3,000 all the way through debt repayment – and this will bring us to the doorstep of debt freedom much faster – which ends up savings u a lot in interest paid.

13 frugal pleasures

My financial goals for 2010 are very simple. I want to live (purely by choice) on unemployment level income, in my state it is $674 per week. I have designed a scale back plan that allows my family to easily live on this amount,asnd still save nearly $250 per month.

To me much more important than the actual financial goal and is to execute this project with an intense focus on simplifying and simplicity while teasing and squeezing every bit of pleasure out of life that is available. In other words I want to execute my plan day by day not for the final outcome which will be a huge savings, but rather for the pure pleasure of the challenge and journey.

of course it does not escape me that it helps tremendously that i am doing it all by choice.

14 Matt Jabs

Wow… now that is impressive. So you must be free of debt I’m assuming?

15 Robert Espe

Two financial goals for 2010:

(1) expand medical savings from $1500-$ 6000 ($4500 increase)
This will mean I have my yearly deductible, and max out of pocket expenses in cash,

(2) save an additional $21000 toward the purchase of a home.

16 Pam

Hi, what is a ‘side hustle’? Sounds like a second or part time job – or maybe even this blog! I’m very interested in how to do this. My husband and I are overseas missionaries and the financial crisis has had a serious impact on giving. The Lord is good and we have never wanted for anything but our ability to do hospitality has really been curtailed because of food prices where we live. Any ideas of what I could do for a ‘side hustle’ from the Middle East? Thanks, Pam

17 Matt Jabs

Hey Pam, yeah side hustle is a part-time gig – mine is this blog! I suppose you could start a website, but it is a TON of work – and about 95% of people will fail to make money doing so.

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