Saturday, December 29, 2007

Our 2008 Financial Plan

1. Retirement Savings: My fiance has a generous defined benefit pension and I will continue to contribute(including company match) 15% towards my 401k plan. The 401K is invested agressively. The IRA approx. $100K is invested in a portfolio largely comprised of fixed income in a defensive position. As the market settles down, I am planning to move more of the IRA money into equity ETF's. Although we are both behind where we would like to be, we are making good progress towards a reasonable retirement.

2. House: I think I am upside down on my mortgage as my equity got wiped out. Will continue to improve the house gradually without borrowing. The ARM doesn't reset until July 2010 so I am not worried about getting whacked in the short term.

3. Cash Savings: We are funding the wedding and honeymoon. Our goal is to pay cash for everything and to avoid incurring any debt. On the bright side, we have no credit card debt. On the downside, our mergency fund took a big hit with her ring and paying off her credit card debts. By saving most of her check, we should be should be up to 4 months savings by the end of the year. My Tax Refund will go into cash savings. Stretch Goal: 6 months.

4. Car Loans: My loan is at 0% and will be paid off as slowly as possible. Her loan will be paid off 2009. In terms of debt load, our car loans are easily managed on our current income. When her car is paid off, we will continue to drive it for another 2 years and bank her "payment" towards a new vehicle.

5. Student Loans: Although we owe about the same amount on our loans, her loans are larger in relation to her income. Furthermore, we would like to have kids and forgoing her income for a while would hurt. Any extra free cash flow will be used to pay off smaller loans first. In light of the wedding expenses, I expect this plan will largely wait until 2009.

Peace and Happy New Year.

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