Monday, April 1, 2013

Where I stand today

There are few in this world who can claim to have a perfect life. Often money stands between what a person has to do, and what they want to do. I have always been among the masses that found themselves in a less than ideal position when it comes to money. I went to college, I got my degree, I've been diligently working in my profession, and yet I recently found myself with an unsustainable amount of debt (both Credit Cards and Student Loans). This debt is 100% my fault.

What separates myself from the hordes of equally troubled people is that:

  1. I have a plan.
  2. My plan includes both debt reduction, and short/long term financial planning.
  3. I am going to reach or exceed all of the goals in that plan.

Now the $64,000 question that I'm sure you all have is, "How much debt do you currently have?"

$11,937 Credit Cards
$9,703 Car Loan
$53,519 Student Loans

Total Debt: $75,159

It is important to note that besides future car purchases (which I plan to only make when I have a 0% APR offer), and the mortgage I plan on getting, I will never add a single dollar to my debt again. 

A key part of my plan is to completely eliminate all of my debt in less than five years, and at the same time start my savings towards a house, retirement savings, and other long term asset planning. Conservatively, I plan to retire in less than 30 years, but I would not be opposed to retirement in less than 20 years.

I have already begun my journey towards many of these goals. For example, before I started focusing on debt reduction, my credit card debt was floating around $14,500.

Some of the important financial decisions that I have made to date in order to help me reach my goals include:
  1. Worked towards and accepted a promotion which led to a relocation from the East Coast to North Texas. The extreme drop in cost of living, in addition to the raise in salary, mixed with the lack of any state income tax makes Texas an ideal place to live if you are looking to reduce your debt levels.
  2. My wife and I have laid out all of our financial information, gone over where we stand currently and where we want to be in the future, and discussed all of the important family planning topics which are relevant.
  3. Though many of the accounts have less than $1,000 (some of them zero as of today), I have set up a 401(k) through my work, a ROTH IRA and separate Investment account, in addition to a 529 college savings account. Not only have I set up these accounts, but I've set up automatic deposits for all of these accounts, some of which come directly from my paycheck. 
  4. I have opened a savings account for the sole purpose of saving enough to put a 20% down payment on a house in 5 years.
I want to be perfectly clear on one particular topic. I am by no means a financial expert. I have no formal training in personal finance or investments. What I do have, just like everyone reading this, is access to the internet. If you have access to the internet, then there is no excuse for you not to be able to plan out your financial future. Will you have the same goals as my wife and myself? Maybe, maybe not. That doesn't matter. What matters is that you take the bull by the horns, and you never let go. Life is a rodeo my friend, and if you remove the stress of money from your equation, the ride is a lot smoother.

NEXT WEEK: "Plan details, increasing contributions, and where I want to be in retirement."

“For victory is victory, however small, nor is its worth only from what follows from it.” 
― J.R.R. Tolkien