My Personal Finance Odyssey

Generally, my goals each year are fairly simple…save more and spend about the same.  How and where this happens is usually more ambiguous.  However, I’ve decided to write some of them out:

1) Max out 401(k) contributions – This is my core standard every year.  As some of you have seen in previous posts (Tradition or Roth 401(k)), I still struggle mightily with how to allocate my savings between the two.  For now, I’m just not willing to give up the current tax breaks but will attempt to fully fund our Roth IRAs in addition to our 401(k).

2) Max out Roth IRA contributions – as I just mentioned, this is next on the list.  I think almost everyone can appreciate the difficulty of not only maxing our your 401(k), but also capping out the Roth IRA.  For me, that’s a very significant portion of my income.  It’s very strange to have a cringing smile when I learned that the Roth contributions move up to $5000 this year.  While it’s great you can sock away more money, it just makes it that much harder to find the income to do it.  With any luck, I’ll get a reasonable salary increase and that will soften the blow.

3) Maximize returns on cash – In the past, I have just ridden the ups and downs of interest rates on my free cash…from as much as 6% to as low as 1-2%.  For a long time, I didn’t have that much cash on hand and so the lost interest didn’t seem to matter much.  Now that I find myself with considerably more (100K+), it makes a difference.  I already took the first step by opening up a 12 month CD: Fed Rate Cuts – Time to Act with 50% of my cash.   Both the economic indicators as well as talk from the various pundits seem to indicate it’s going to continue downhill for awhile…I’m going to have to figure out what to do with the rest of it.

4)  Reduce Spending on Entertainment – We don’t spend a lot on needless things, but we definitely dine out quite a bit…several hundred dollars a month worth.  I’d like for us to take a little bite out of that.  Granted, we still have to eat and healthy food at home isn’t cheap, either.  Strangely, this may be one of the tougher ones to accomplish.

5) Improve my Earning Power – After making a few big jumps in income, things have been more incremental in the last couple of years. Obviously, I’ve got a long way to go before retirement and need to continue developing my skillset to increase my potential for income generation.  I know I have needed to do this for sometime…I just need to act.

6) Maintain Vigilence on Liabilities – This is more of a reminder to myself that I must always strive to find ways to create wealth.  Last year, I spent quite a bit of time looking at all of my expenses and improving my position, whether it was insurance or cable.  I must continue to do that…and run a tight financial “ship” as well. 

 As I look at each of the items on the list, I see a number of them that don’t appear to be especially difficult, while there are others that will definitely take some time / effort.  To that extent, I’ve probably made myself some reasonable goals.   Of course, like any endeavor, we’ll see if I have the discipline to accomplish them.