Diva’s Personal Finance Strategy
Update April 5, 2013
Lately my financial strategy has been evolving to meet my short-term and long-term goals.
Short-term goals (2013)
- Be CC free
- Pay cash for a new car
- Increase 401(k) savings rate
I’m super close to eliminating my credit card debt. I fully expect to do so on April 15, 2013! Can’t wait. I will immediately turn my attention to saving money to pay cash for a car. I’m still driving my 2005 Honda Civic and it has less than 100,000 miles on it. It’s worth just under $8K if I sell it myself. Which is crazy because I bought it for $15K. My goal is to pay $15,000 on a new-to-me car, that can last me about four to five years. So that means I only need to save $7,0000 for a replacement. I want to pay cash. This should take me three to four months.
Meanwhile, I will start slowly increasing my 401(K) contributions. Right now 4% of my paycheck goes towards my 401(k). I plan on increasing this to 10% by the end of the year. I will continue to put aside $75 per pay check for my emergency fund. So by the end of 2013, I will have a new car, be unsecured debt free, be saving 10% of my income in my 401(k) and have $2,411 in my emergency fund.
Mid-term goals (2014 – 2016)
- Build emergency fund of $12,000
- Save $30,000 for down payment on a town home (second property)
- Eliminate HELOC (first property)
My next step in 2014 will be focused on increasing my emergency fund to $12,000 and saving money for a down payment on a town home in which to live in. My goal for the down payment will be $30,000. So I expect to reach this sometime in 2015. My hope is to find a town home that needs some updating that I can live in while fixing it up. Then I will turn my attention to eliminating my HELOC. Right now this is $41,550. I want to eliminate that altogether and then turn my attention to my long term goals.
Long-term goals (2017 – 2020)
- Increase emergency fund to $24,000
- Save $30,000 for down payment on rental property (third property)
My long term goal is to buy a total of four properties in the North Dallas area that I can fix up while living in it, renting out the previously purchased property. This is after increasing my emergency fund.
This is my vision now. Nice to have it documented so I can come back to it in time and see how things pan out.
December 26, 2011
Ever wonder what my strategy is related to my personal finance? Me too! No, just kidding. My strategy for managing my personal finances is sort of clear to me. But I feel like I need to document it so that I can live towards it better. I sort of started with Dave Ramsey’s Baby Steps, however, I’ve altered it to give myself more of a safety net.
Baby Step 1) Build an initial $1000 emergency fund.
Dave recommends saving an initial $1000 for the emergency fund, then proceeding with Baby Step 2. I have been laid off three times which is the reason why I’m in debt. I need to build a bigger emergency fund to make myself comfortable in the event of another layoff.
Baby Step 2) Eliminate Debt
Honda Car: $7,250 Visa 1: $12,991
Visa 2: $20,000
Baby Step 3a) Six to nine month emergency fund
One Month: $4,000
Three Months: $12,000
Six Months: $24,000
Nine Months: $36,000
One Year: $48,000
Baby Step 3b) Pay Cash for Cars
I’ve shared with you what kind of car I drive. I need to begin saving for replacing that car. I would like to save up $12,000 for a replacement in 2014. I hope to complete paying off my debt and build up three months of savings before adding in this component.
Baby Step 4) Maximize Retirement
Dave recommends not contributing to a 401(k) while working on baby steps 2 and 3. I just can not bring myself to NOT collect the match from my employer. It’s free money AND as I’m already in my 40′s I need to make the most of the time that I have for the effects of compounding interest. Currently I’m contributing 4% of my income to my 401(k) and I’m receiving the match from my company. Once I complete steps 2 & 3, I will be maxing out my 401k and my IRA contribution opportunities as well as investing in other areas.
Baby Step 5) College Savings
This is a step I can avoid as I will not be putting children through college. At least at this point.
Baby Step 6) Pay off the mortgage
That’s some point down the road.
Baby Step 7) Live Like No One Else