Wednesday, January 18, 2006

Financial planning

In the four and a half months that I've had a blog, I've started four titles with the word "happy". I guess I'm a happy person for the most part, although it would be more honest to admit to posting when I'm chipper and not going near the computer when I'm down and out.

I've always had this feeling of needing to save more money, of being in a precarious position and not working towards any of my big goals like homeownership et c. I put money into my savings account but not enough, and I'm always distracted--should I be putting it in my 401(k) instead? And I always wanted to invest my money, to buy stocks and things.

So, I finally figured out my Plan.

One over-arching uber-plan that covers everything step by step so that I can stop worrying about it and just do it instead. The only hard part will be sticking to the budget that I started as a New Years Goal, but that will come along. This month hasn't been too far off budget really.

So, here are the four goals:

1. Save 5,000 for emergency money. Every financial book reccommends keeping on hand enough savings to cover 3 to 6 months of living expenses. I reckon my expenses at about a grand a month, although I could cut that back if neccessary. I figure that putting an extra 80/month on top of what I already contribute to will bring my savings up to that by the year's end.

2. Gradually increase my 401(k) contributions to 12%, then keep it there, like, forever. An ongoing sort of thing. The bank matches 5%, so I might actually be able to retire someday.

3. Save 10,000 for a down payment for a house. (Hope that D also raises 10k in that time.) Assuming no major pay raises, this will take three years.

4. (After everything else) Start putting 100/month into a stock portfolio. Retire wealthy.

Sure, it's a 5-year plan, but I feel much easier about everything than I did before.

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