Since the second quarter of the year has come to an end, I wanted to keep myself on track with our financial goals and provide a status update. And some lessons learned along the way. Is it just me or is 2020 feeling like both the longest and quickest year (pretty sure April had 100 days alone)!?
I know how lucky my husband and I have been to still be employed during this difficult time and it is not something we take for granted. And because we still have our jobs, we have been able to keep the same financial goals.
If one of us had lost our job, then we might have had to pivot a bit to what our goals would be at that current moment in time. Whatever your situation is, you can and should change your goals as needed. Sometimes life happens.
short-term financial goals status updates
maximize roth ira 2019 contributions: complete
Kind of embarrassed to say that we did not prioritize this while in 2019, which was partially because of finishing paying off student loan debt.
Big mistake! The good news? You have until the end of the tax deadline to contribute to your previous year’s contribution amount.
And thanks to a global pandemic, it was extended until July, which gave us the perfect opportunity to actually set out to do what we had planned, which was to max out those contributions.
The bonus? Your taxable income is lowered, which hopefully with various investments and whatnot puts you in a lower tax bracket.
maximize roth ira 2020 contributions: on track
While we technically still have about 9 months to reach this goal, we discussed that the sooner we do this the better.
Why? With the market appearing to be on the upswing, we have the potential to make more on our return on investment if we put the money in sooner than later.
From the money we have already put into the Roth IRA from the 2019 contributions in the past couple of months, we have already seen some gains!
Obviously, this can change given what is happening in the world around us, but it’s nice to see your money growing.
maximize my employer 401k for 2020: on track
This is something we have talked about, but have not actually planned to do until this year. While I have always contributed more than the bare minimum that would give you that employer match, we have not really been in a financial position to max it out.
Why? Oh, I don’t know, student loans (are you sick of me talking about this yet?!). As you can see, this has had a HUGE impact on the financial decisions we have made and not in a good way.
Now that student loan debt is behind us, we are able to plan for financial goals that will benefit us in the future. Not that paying our loans off or having them forgiven didn’t benefit us, but it wasn’t our choice to make that a priority goal. If we hadn’t, then we would be so so much further behind. Not to mention the added stress they added to our lives.
Anyways, now that the tangent is over….alllllll the reasons why we couldn’t max our contributions: student loans, car payments, daycare (oh yea, those kids are not cheap and that has definitely slowed down some progress), and a mortgage.
Why am I not maximizing this quickly as we plan with the Roth IRA contributions? Because I want to get that employer match each month. And if I don’t contribute in any given pay period to that goal, well… I’m flushing free money down the toilet. Let that be a lesson! Try to space out your 401k contributions throughout the year can ensure your employer matches everything you should get by contributing. Knowing how your employer sets up their 401K match is important to look up!
pay off 2nd car by summer 2021: on track
We could take all of our extra money and throw it at this debt…but we’re not. Wait, what? Why would someone keep a debt longer than they need to?!
Bottom line: having a low interest rate. With an interest rate just over 2% (thank you, good credit!), there is no reason to take that money and pay off the car. We have a higher return on investment focusing on our other financial goals (read: maximizing Roth IRA and 401K).
While we are not going crazy with how much we allocate here each month, we are at least taking what would have gone to paying our other car (since that is now paid off!) and put it toward this goal. This effectively is doubling how much we pay each month.
As much as I want to just pay it off ASAP, I am being patient and sticking with the plan.
Why is this goal so important?
My husband and I have talked about it and are on the same page: we plan to keep our current cars as long as possible to maximize not having a car payment.
I cannot wait until we have all of that extra money that does not need to pay off this type of debt.
Someone once said to me “you will always have a car payment.” And it shook me to my core. How is that possible? For the majority of Americans that own cars, I believe that statement to be true. People either lease or upgrade their cars after a few years, which leads to this perpetual cycle of always having a car payment.
I knew that when I heard that, I was not going to be one of those people. Being on the same wavelength as my husband with our finances has made things so much easier in our marriage.
The question is: if you have a reliable, fuel-efficient car that you have always taken care of, why would you willingly trade it in to just go back to square one with a new car?
I think part of the mentality I have about owning a car is based on what my parents did. Could they have upgraded their vehicles on the regular? Sure, but they didn’t. My dad has the same type of car that I do and his car has over 180,000 miles and he is finally upgrading.
His car is at least 13 years old and while he could have gotten a new car many many years ago, he didn’t. He kept what he had for quite a while and then did some research before getting a new car.
Bottom line: I’m putting all that extra money I will save to other financial goals and you can too! Keep your car for as long as you safely can and you too can save thousands of dollars.
reduce monthly food spending by 30%: work in progress
Honestly, the one category where my husband and I struggle, like really struggle, is with our food budget.
I hate to admit this being a dietitian and all. But really, what does that have to do with being a dietitian….we all have our struggles and this one is pretty common!
During the beginning of the month, it always seems like we are on track, then life gets in the way. Next thing I know, we have spent an outrageous amount of money on groceries, restaurants/take-out, and alcohol. What are we spending money on at the grocery store?!
We are working on:
- sticking to our meal plan for the week
- consistently using what we already have in the pantry or freezer
- not eating out as much
I’ll keep you posted on our progress as this is a new goal we plan to really focus on. We plan to maintain lower spending in this category once we reach this goal.
While we are on track (or have completed) four out of five goals, this is the one financial goal where we need to really work on it because there is so much variability in our monthly food budget. I know that I’m not alone in struggling with this budget category.
I will be sharing the strategies we use to reduce spending in this category. We will see how much progress is made with the next quarterly goal report.
always keep moving forward
I’m not going to add a 5th goal even though the 2019 Roth IRA contribution goal is complete and instead will focus on the other 4 goals. After my quarter three status update, I will most likely re-evaluate and create an additional financial goal.
What financial goals have you recently accomplished?