Author Topic: Determining Next Big Financial Goals?  (Read 3090 times)

justplucky

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Determining Next Big Financial Goals?
« on: September 11, 2014, 07:25:01 PM »
For the past few years my significant financial goals have been really clear to me, such as paying off $20,000 in student loans, purchasing a used car, creating an emergency fund, and saving 20% in my 401(k). Now that those things have happened, I'm having trouble figuring out where to go next. I do have smaller goals, such as saving to take a two week road trip across the Pacific NW next summer, that I set aside a bit of money each month for. My husband isn't much help; we had a conversation that went like this:

Me: "What should our financial goals be?"
Him: "Save as much as possible."
Me: O_o "I'm not motivated by goals like that."
Him: O_o

Here are some of the goals I've thought about, along with some comments on each:

- Save to Buy a House.
Paying $980/month (38% of our current take-home income) for rent is grating on me, but I'm not sure we're settled in the area we're currently in. There are basically two other areas we could end up moving to in the next few years, and only one is a place where I would consider buying a house (the other has real estate that is disgustingly overpriced in my opinion and I don't want to live there more than a couple of years).

- Save more for retirement.
Early retirement isn't going to happen at a 20% savings rate, but the best savings/investment vehicles for this tend to lock in money or be more risky on the off chance that I need to access the money for something else more short term.

- Save for further education.
Save up to go back to school to get a more in-demand/specific skill set. My husband and I's marketable skills are mediocre at best, and it would be nice for one of us to be in a solid career we enjoy.

I have about $7,000 hanging out in plain old savings accounts right now beyond my six month emergency fund. Obviously the thing that gives me the most flexibility is to just leave it in savings accounts. I would start investing in a mutual fund, but without a goal I don't know if I'll need to access the bulk of the money I'm saving in six months or six years. Any ideas of what to do next?



arebelspy

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Re: Determining Next Big Financial Goals?
« Reply #1 on: September 11, 2014, 09:00:04 PM »
I'm with your husband, I prefer the simple "save as much as possible."  :)

If you're striving for FIRE, you should determine where you need to get to, then set intermediate goals ("6-figure net worth" is a common one, or "half our FIRE expeses are covered by our stache at a 4% SWR" ).

If you aren't striving for FIRE, figure out what you do want.

It sounds like your future plans are in flux, between the possibility of more education, the line about not wanting to invest on the "off chance" you need it for something short term, etc. 

The best thing to do, before setting big financial goals, is set real life goals, and figure out what you want your future to look like.  Once you have that, then you can set financial goals around it.

The best way to move towards whatever that is in the meantime though, is to save as much as possible.  ;)
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bearkat

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Re: Determining Next Big Financial Goals?
« Reply #2 on: September 12, 2014, 01:04:53 AM »
How long has it been since you accomplished the goals you listed? A week, a month, a year? If it hasn't been long then I think you're okay leaving it a savings account (and continuing to add to it), for the next several months until you decide what you want your life to look life.

That said, if you really do just have $7,000 sitting around, you could always move it to two Roth IRAs and park it a money market fund. If it turns out you need it, you can take it out (before April 2015) without any issues, but if you don't, then you haven't missed out on locking in 2014 savings. This at least gives you some time to figure life out without rushing, but also pushes you to decide something in the next 7 months.

RichMoose

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Re: Determining Next Big Financial Goals?
« Reply #3 on: September 12, 2014, 06:41:48 AM »
How about your next goal being to max out all your tax-advantaged accounts - 401(k) and Roth IRA for both of you.

I wouldn't view rent as throwing money away just because it makes up 38% of your monthly net. What are house prices like in your area? Easy math courtesy of jlcollinsnh.com (a great blog for stocks & housing btw) says if the house you're living in costs more than $108000 renting is the smarter choice ($980 x ~110). Even then it's rarely worth purchasing unless you are staying put for a minimum of 5 years.

Saving for education may be worthwhile if you have clear goals of where you want to go, what you're going to do with it, and it will result in meaningfully higher income to justify the cost.

 

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