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Prioritization for the Win! Now to Save Like Hell…

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Mr. BFS and I finally sat down last weekend and prioritized those New Year’s resolutions that I keep mentioning.  We have a ton of financial goals, but those were the most important to both of us this year.

Prioritized Goals

Specifically, we wanted to know what we wanted to fund first and came up with this breakdown:

  1. 2012 Roth IRA’s (needed $8800 more)
  2. Rent House Mortgage Payoff (need $23,500 more)
  3. 2013 Roth IRA’s (need $11,000 apparently)

How We Decided

It took us about an hour to come up with what we’d fund first since paying off the mortgage on the rent house is actually the most important thing for us this year.  We finally decided on funding the 2012 Roth IRA’s before anything else simply since it has a hard-and-fast deadline…we had to fund them before April 2013 or forever hold our peace about 2012.  Plus, you can withdraw your contributions from a Roth IRA anytime – you just can’t put it back afterwards and can’t touch any interest earned without penalties.

That said, we funded our 2012 Roth IRA’s at the end of last week with $8800 from our investment cash.  Yay, one resolution checked off!

Now we have less than $3000 of investment cash left, so we will have to save like crazy to hit the other two goals this year.  That means that we’ll need to save more than $30,000 in pure cash by the end of 2013 in order to pay off the rent house mortgage and fully fund the 2013 Roth IRA’s.

Is a $30,000 Savings Goal in One Year Realistic?

It’s doable but we will need to keep our income at or above what it has been and spend based on our budget.  Since we do pay 25%-35% in taxes, we need at least $8000 a month just to cover our basic, budgeted expenses like income taxes, mortgages, property taxes, insurances, food, utilities, etc.  So we will need to make a minimum of $130,000 in 2013 just to have a shot at hitting our last two financial goals.

It’s insane to me to think $8000 is our new minimum per month just to live without touching savings, but the last few years have taught me that you shouldn’t just concentrate on one part of your financial equation.  If you spend $3000 a month but make $2500 a month, you are still worse off than spending $8000 a month and making $10,000.  It’s a matter of income vs expenses and what you do with the difference.

I am logical and smart enough to get that, but $8000 is still an OMG number for me.  I cannot wait until we have both mortgages paid off, but we’ll still be operating at $6500 a month, which is still above what I’ve grown used to…owning two homes just naturally comes with two sets of expenses.  We do make more than we spend, so we aren’t looking into debt solutions or anything, but I was very used to living on $3000-$3500 a month.  I’ll get my head wrapped around the new numbers eventually.  It’s just new.  Rental income helps soften the money blow, lol.  🙂

How are you tackling your resolutions this year?  Any big ones on the hit list for 2013?

FYI:  I worked at a dead end cubicle job from 2005-2011 for about $30,000 per year.  I went self-employed in July 2011 and make between $70,000-$90,000 through blogging, professional pet sitting, hubby's reffing, and our rental home.  If you’d like to start your own site (link to my free step-by-step guide), I highly suggest checking out Bluehost (my referral link with a nice discount for you, PLUS a free custom header banner from me!).  Please contact me any time at budgetingfunstuff*at*gmail*dot*com with questions or just to brainstorm! I’d love to help!
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20 thoughts on “Prioritization for the Win! Now to Save Like Hell…

  1. Not having a mortgage does indeed feel good. I know! 🙂 🙂 🙂 I am cheering you on – virtually – as you hit your next two goals.

  2. I have three big goals this year: Pay off all credit card & medical debt by April 30 (EEK), get our emergency savings up to at least $2000 by June 30 (DOUBLE EEK… yes, we’re sort of starting over), and test out of 4 classes (saving me approximately $5000 in educational expenses and shaving off a few months to graduation).

    Two happy dances in the new year thus far – we paid off our first credit card two weeks ago and I caught my husband applying for a job… without me nagging! 🙂

  3. That’s a BIG goal, but it looks like you are ready for it! I have a slightly smaller goal to find $25K to put towards debt payment, on top or $10K normal payments. Like your mortgage it is not bad debt but I am just tired of seeing it there. Good luck!

  4. @Michelle, good luck to you too!!!

    @Denise, yeah, it’ll take us a while to pay off our current home (around $205,000 left), but it would be nice to be down to just one mortgage. Thanks for the support!

    @Call Me, good luck!

    @Mel, yay!!! Cool beans!!!

    @Pauline, I totally understand. Good luck!

  5. Our big goal this year is getting rid of my girlfriend’s student loan debt. She started with $80,000+ when she graduated and I actually wrote an update today over on my blog if you are interested in our progress!

  6. I like an aggressive savings attitude. Now’s the time to do the heavy lifting – if not now, when?

    Like you and Len, we also have aggressive savings targets – fully funding 2012 Roth IRA’s by April 15, 2013 Roth’s by September 15, add $7,000 to emergency fund by years end, and others.

    To accomplish this, like Joe @ RB40, we’ve pretty much enacted a household spending freeze. I don’t need a vacation or a car payment. I would much rather buy another house in a couple of years. I’m happy to sacrifice a little now to add more certainty to our future financial picture.

  7. This year, I used the resolutions to renew my commitment to volunteering, improving my writing and ultimately reach some blogging goals. I am starting to see a positive trend after just 3-4 weeks.

  8. For 2013, I want to max out my 401(k), increase my emergency fund to cover replacing all of my appliances in addition to six months of expenses, possibly max out my Roth IRA, and pay down the mortgage by saving/investing 50% of my regular net income and 100% of my net bonuses. I think I can make some good progress this year!

  9. I missed my debt reduction goal in 2012 but I have a new furnace and there seemed to be too many little money emergencies to get ahead.

    I have a tough new budget for 2013 and my first goal is to get my emergency savings up so I don’t have to cut debt reduction to cover the broken windshield, the emergency vet visit, the flat tire, the tax issue……

  10. @Lance, I took a look. Great plan!

    @The Happy Homeowner, I know, yay!

    @Hunter, you go boy!!!

    @krantcents, congrats on stepping it up – good luck!

    @Leigh, good luck!

    @Jane Savers, yay for emergency funds!

    @Rod, congrats!

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