Financial Plan 2007
Happy New Year to All!
This will be our financial plan for the new year. After getting married at the end of December this will be our first year of joint income and expenses. The burden of my debt will be eased somewhat by our combined incomes and we will reap some increased efficiencies from a joint household.
After analyzing our spending for 2006 I see great room for improvement in many areas and by the end of this year we should be well on our way towards some positive investment numbers for the first time.
Here are the major factors for the next year.
1. Sources of Income:
- Dual salaries – my wife will be the primary earner in the household for next 2+ years while I complete my training. Neither one of us have the opportunity to earn extra income other than working more hours, therefore these numbers will remain relatively fixed from month to month. There are no performance based increases in salary, but I hope to get a 1-2% increase in salary from an inflation/cost of living adjustment in July when my contract gets renewed.
- Family Income – my wife gets a small amount of income from a family farm. As with most forms of agriculture it is not a steady income. The checks come after the harvest is in. We have no control over this source of income and will treat it like a bonus.
- Investment Income – I have very few investments that earn income but I hope to add to it for this year. My wife does have some savings but we have not been actively managing them. By the end of this year we should be well diversified and in control of our holdings.
2. The Expenses:
- Overall expenses – should be much lower for 2007 after an abnormally high year in 2006. Moving and wedding expenses skewed much of our spending but the big four are the same as in most families: Rent, transportation, food, clothing. We should be able to make improvments in all 4 of those categories this year.
- Debt expense – at this time I have not started to bear the full burden of the cost of my education. I am currently paying off one small loan and will have to start payments on another one of these loans late next year. The majority of my loans are consolidated at a very low interest rate and will remain in forbearance for another year. My wife also has a small education loan that she is currently paying off. Combined, the costs of these loans for the next year should not be too large a burden that it limits our saving and investing.
3. The Goals:
- Savings – currently we have a 2 month old online savings account with Emigrant Direct that we will will fund until we have 3 months of living expenses saved. With our dual incomes we have some flexibility if someone was not able to work.
- Investments – Our goal is to max out both of our Roth IRA’s first for 2006, and then again for 2007 if possible. Neither of our jobs will match 401k contributions so the potential of tax free growth in a Roth is a better deal since we are not passing up any free money.
- Debt – Our goal for debt management this year is to be free of credit card debt and making our scheduled payments to our student loans. We will not attempt to pay off any of the loans early at this time
- Expenses - our goal for expense management is to keep our total expenses for the year less than $40,000. Since this is year 1 and we do not have a comparable set of expenses to compare to this number could be off a great deal. This will be equivalent to us living off of one salary for the year.
