2008 Financial Goals

My wife and I had a quick conversation to establish our 2008 Financial Goals.

1) Primary House Down payment Goal ($80,000)
We have $36,500 currently earmarked for the house downpayment so we still have a challenge ahead of us to meet this goal.
2) Fully Fund wife's 2007 Roth IRA contributions ($2,900 left)
My wife and I contributed $1,100 so far to her 2007 Roth IRA - we need to max this out before April 15th.
3) Fully Fund my 401(k) ($15,500)
My 401(k) is a higher priority than my wife's 401(k) for a couple reasons. She currently is not eligible to contribute to a 401(k). Once we get back to the US she will likely return to a public teaching job and hopefully be eligible to contribute to a 401(k), but the plan offered will likely be not as attractive as mine.
4) Fully Fund our 2008 Roth IRAs ($10,000)
This is a big jump in funds than the previous year when I really only had to worry about my contributions at $4,000. Now we are trying to max out two contributions.
5) Fully Fund my wife's 401(k) to Max Permitted ($15,500)
We anticipate that my wife will resume teaching in the US in the fall (but we don't know for sure) since my assignment could potentially be extended. Assuming she starts teaching, our plan is to have her contribute significantly to her 401(k) plan. We don't know what that limit will be, but if possible we would like to contribute all $15.5k this year to reduce our tax burden as much as possible.
6) Fully Fund my wife's card fund ($20,000)
My wife has set aside ~$17,000 for a new car. This is a very important goal for her. She wants $20,000 set aside as soon as possible although we don't have a firm timetable for the car purchase. She is setting aside $250 from our cash flow each month for the car fund.

If we get all this done in 2008 I think we will be pretty successful.

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Comments (6)

What terms are you targeting for your new home purchase? My wife and I have a 15 yr loan with an incredibly low interest rate, but we've been both praised and criticized for this decision.

Posted by Jr | January 24, 2008 10:07 AM

Lofty goals! Good luck to you in 2008.

My employer recently announced the addition of a Roth 401k option. Contributions go into the same 401k account, but are made after-tax instead of pre-tax, and the max is still $15,500. I'm confused as to my optimal designation. My current tax brack is 25% and my expected tax bracket in retirement is 15%. Should I contribute pre-tax and avoid tax payments now, paying taxes on the earnings in the future? Or should I contribute after-tax, paying taxes now, but withdrawal tax-free in the future? I seem to be finding conflicting opinions. If your employer offered the roth 401k option, how would it change your designation?
Thanks in advance for your help

Posted by CF27 | January 24, 2008 11:34 AM

Why not buy a 2-3 year old used (certified pre-owned w/ warranty) car for your wife with the $17,000 already saved (doubt it would be that much though) and use the rest towards the down payment on your house. Buying a new car which depreciates severely once driven off the lot while you're saving for a house down payment isn't fiscally responsible. Better yet, delay the new car purchase and use the entire $17,000 towards your new house. What's more important to you, driving in a new car (which'll only be new for a year) or getting that house? If you choose the car, I would suggest you move House Downpayment down from your #1 goal to last.

Posted by Joe Wenzel | January 24, 2008 1:14 PM

Goals besides retirement are important in order to maintain sanity (wife's car fund). Something I like to do is to consider how much we would be spending per month if we did finance it, and use that as my starting point for saving for it.

Posted by Charlie | January 24, 2008 3:48 PM

Jr, Good question we haven't nailed down why type of mortgage we will get -- really depends on what price range we end up in. However most likely we will go for a 30yr fixed unless we decide that we will becomfortable with the cash flow demands of a 15yr. I care less about interest rate and more about the monthly cash flow requirements - if I can make the payment and have plenty of cushion then we are in great shape!

CF27 - My employer just started the Roth 401k too however my current thinking is to hold off until we settle down a bit more -- this year in particular we don't have too many deductions so I am planning on 100% traditional 401k contributions. If you really think your future tax bracket at withdrawal will be lower than traditional 401k contributions are the way to go. My advice is to balance between traditional and roth as no one really knows what the future tax rates will be.

Joe - I certainly hope we can - that would be my plan at least. However, now that we are married there are two sets of expectations we need to meet. Hopefully I can get my wife to agree with me -- right now she is set on a $20k fund because she knows that regardless of what we decide to buy it should be enough to cover what we decide to buy.

Charlie, I kinda feel the house fund is a big enough outside retirement goal, but the idea of buying a car seems to be more tangable and I think therefore more important to my wife.

Posted by 2million | January 24, 2008 8:52 PM

Great goals, I was curious though, how do you manage your monthly expenses and bill payment? It seems you use Wachovia (I think) for online banking, have you put much effort into better managing your daily finances to help ensure you hit your long term goals?

Devin

Posted by Devin Miller | February 7, 2008 3:33 PM