Financial Plan 2008
After watching the angst on Wall Street for the first two weeks of this year, I can take some solace in the fact that our family enters 2008 on a much better financial foundation than when we started 2007.
We have eliminated all of our high interest debt on both our credit cards and school loans. We have a reasonable budget for the upcoming year and the insight to know where we need to make improvements.
Unfortunately, that is the extent of the good news. We will have an uphill battle due to 2 major changes in our lifestyle occurring in 2008.
Based on that information, I created 3 somewhat realistic scenarios of what our financial picture could look like at the end of 2008:
Some thoughts on these scenarios:
By the end of 2008 we could end up anywhere from being $20,000 further in debt to finally crossing the zero threshold of our net worth.
In our worst case scenario the major factors would include a 20% decline in the markets, that my wife will not be able to return to work and that our household expenses are slightly increased relative to 2007.
In our Reasonable scenario the major factors would include the markets being flat, that my wife returns to work part time and that we are able to make some reasonable savings in our expenses relative to 2007.
In our Great News scenario the major factors would include a slight increase in the markets, that my wife would return to work full time and that we will be able to make some dramatic savings in our expenses relative to 2007.
Depending on your level of paranoia, I realize that life does throw us curves and that things could be anywhere from drastically worse to drastically better.
This does give us a reasonable target and something to shoot for in the upcoming year. I welcome the challenge and hope you enjoy the journey.
