Goals For 2008 – Plus Steps We’re Taking To Prepare For The New Baby And A New Year

As many of you know, my wife and I are expecting our third child.  My wife is an educator.  If all goes well, my wife will have the baby in April.  She will not work the last two months of school.  So, as we plan for 2008, we have to account for this loss of income – and the additional expense associated with a newborn baby.  Still, we plan to be very, very aggressive with our retirement and education savings, plus we plan to save as much as we can in our regular savings account.

Here are our definite goals for 2008:

Account Amount Progress
My 403b $15,500
My Wife’s Pension $2,000
Daughter’s ESA $2,000
Son’s ESA (’07,’08) $4,000
My Roth $5,000
My Wifes’ Roth $5,000
Total $33,500

Here are our stretch goals for 2008:

Account Amount Progress
My 403b $15,500
My Wife’s Pension $2,000
Daughter’s ESA $2,000
Son’s ESA (’07,’08) $4,000
My Roth $5,000
My Wifes’ Roth $5,000
Brokerage Account $8,000
Additional Savings $8,000
Total $49,500

Are there some things that I can do in 2007 that might help us reach our 2008 goals?  Sure!

  1. I can adjust tax withholdings.  As we move from a family of 4 to a family of 5, we’ll have an extra dependent (and lower taxes) in 2008.
  2. I can use any bonus money / gift money that I might receive in 2007 and apply it to my Son’s ESA.  (I’ll have until April 15 to fully-fund the 2007 contributions to his ESA.)
  3. I can begin to look for deals on diapers / baby clothes / baby-related items.  For instance, when winter clothing goes on sale after Christmas, I can stock up for next year.
  4. When friends and family ask, “What do you want for Christmas or your birthday?”, I can reply, “Diapers and formula, diapers and formula.”
  5. I can make a slight change in our health insurance coverage.  We shifted to a slightly cheaper plan, which should save us about $30 a month.
  6. I can continue to lose weight.  When I eat less, I spend less on groceries.  When I weigh less, I sleep better.  When I sleep better, I spend less money on sleep medication.  (I no longer need Lunesta – a $50 per month savings!)

My wife and I cannot wait for the baby to be born.  But, we also realize that our household expenses will go up, while our household income will (temporarily) go down.  I love being debt-free, because it gives us the opportunity to spend money when we want and SAVE money when we want.  So, if things get a little tight, we can do without a few niceties – and we don’t have to worry about debt collectors or credit card companies.

2008 is shaping up to be an awesome, interesting, busy year.  Having a plan helps keep me grounded, focused, and motivated.

If you have goals for 2008, I’d love to hear about them.

By the way, ESA stands for Education Savings Account – also known as a Coverdell Education Savings Account.

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19 Responses to Goals For 2008 – Plus Steps We’re Taking To Prepare For The New Baby And A New Year

  1. You said you would be without your wife’s income for awhile. If she is an educator, is she not paid on a 12 month schedule?

  2. Radio Detector says:

    Good plan. That would be an amazing idea.

  3. NCN says:

    SingleGuyMoney – Yes, she is paid year-round, but after she uses up her sick days and personal days, she’ll be “docked” that portion of her salary. Most teachers are paid for 180 days worth of work… but their checks are “spread out” over 365 days. So, for every day that she misses, over here alloted days, she’ll lose 1/180th of her pay. So, if she misses, say 30 days, she’ll lose 30/180ths of her income, or 1/6th. The way that they do it is, they calculate the missing income and spread it out over the remaining paychecks… so, she’ll still receive a monthly paycheck, but the monthly amounts will be reduced.
    NCN

  4. Tim says:

    doesn’t seem to be any wiggle room in your savings goals, especially with a new child on the way. What is your emergency fund budget? It doesn’t look like you’ve made adjustments according to lessons learned from 2007, so I think even though your goals are good, you have a high probability of not attaining them. This is something you really don’t want to have year after year. You want goals to be attainable. I would think resetting the total savings goal to $35k-$40k would seem like a better target stretch goals. After all, you are still $12k behind in replenishing your ING savings account (presumably this was your emergency fund). Taking this into account, in order to be positive $8k for your additional savings, your total 2008 savings target is actually $51,500 ($49500+$12000).

    I’m not sure I’d be scrimping on health insurance coverage, either, unless the coverage was the same and you got a better rate. After all, you have growing children and a new one on the way, which to me doesn’t seem like the moment to be lowering insurance coverage. Rather, a time to increase coverage.

    Plus, knowing you are going to have additional costs associated with a new born, plus wife’s income disruption, again doesn’t sound like you learned and applied lessons from your 2007 savings plan.

  5. NCN says:

    Tim…

    The insurance was almost the same policy, simply offered by a different company / provider. The coverage is actually a little better for a little less money.

    As for the goals, I ALWAYS create goals that are either impossible or next-to impossible to reach. I like to push myself.

    As for the emergency fund, it’s separate from my savings account, and it’s fully-funded. The additional savings (16K in savings and brokerage) will go towards rebuilding my savings… which were depleted in 2007.

    As for learning my lesson, what do you mean? I live comfortably, I fully-fund my retirement, and I save every extra dollar. Do you mean that I should lower my goal numbers?

    As for the van, that was an expense that I knew was coming… it just came a year sooner than expected. So, instead of 2008, it came in 2007. I had to adjust, mid-stream, which is kinda-sorta the whole point of managing my personal finances. Because I’m debt free, I can allocate money to retirement, savings, or buying stuff… and I don’t have to worry about paying interest.

    I only give myself a 1 in 3 shot at reaching my 2007 goals… but heck, if I only save half as much as I’m hoping to save, I’m still way ahead of the game.

    Thanks for the comments… keep ‘em coming…
    NCN

  6. Sam says:

    We’ve been talking about our 2008 goals and while we have not put pen to paper yet this is what we think our goals will be.
    (1) Finish paying off unsecured debt, at present $5500, most should be gone by end of the year but a small portion may roll over into January 08.
    (2) Fully fund our 401ks for 2008 $31,000. No change in our budget is necessary as we have maxed out our 401ks in 2007.
    (3) Fully fund 2007 IRAs. $8000 by April 15th.
    (4) Fully fund 2008 IRAs, $10,000.
    (5) Buy a nused car for me – $15,000 – $20,000. Hope to do this with cash.
    (6) Fully fund emergency fund – $16,000.
    (7) Other goals: baby fund, furniture/house projects and travel fund.

    Total goals (except 401ks – already budgeted) $54,000. This past year we’ve paid off almost $50,000 in debt so we should come close to being able to manage the above goals.

  7. piannist says:

    Hi NCN – I’ve just started reading your blog and am finding it very helpful in my own debt reduction. Thanks!
    Just wanted to point out, but I’m sure you’ve already considered it – one year of formula costs an average of $2500 (more for kids with certain allergies). Breastfeeding or bottle feeding pumped milk costs significantly less. Thought I’d throw it out there.

  8. NCN says:

    piannist – yep, it’s a bummer that formula is so expensive.. my wife has a particular medication that she takes… so, we have to use formula…

    Sam – wowsers… great job on the debt reduction, and 2008 is setting up to be a great year for you!

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  10. Question do you pay income tax on the subsidized housing? If so will having another dependent increase your chances of getting hit with AMT? AMT now hits many middle class people because of large number of deductions like child tax credit, # of dependents, etc. I worry all the time about us as DINKS getting hit as soon as we have kids.

    However I think we’re fine because we’re passing the point of getting hit where we just pay a lot of taxes period.

  11. Tim says:

    NCN,
    I agree that your goals should push you; however, constantly making unattainable goals is counter productive and rather defeatist. Believe it or not, there is added stress in not attaining your goals; moreover, there will always be unexpected things popping up, which again adds additional stress. Part of effectively managing anything is to reduce the oh craps in our life. Why put the burden on yourself, when you can make it a 2:3 chance of success? You are still pushing yourself, but also reducing your stress load and creating a buffer for unexpected things. You can always dump whatever remains at the end of the month and the year into savings. Yes, you have until april 08 to fund certain items, but that also means you are reducing your 08 savings goals in order to play catch up.
    as for lessons, part of managing your finances is to learn what you did right and what you did wrong the previous year. If you did not reach your financial goals for the previous years, you should analyze why and then apply for your financial goals for the new year. There is nothing wrong with exceeding your goals, either.

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  13. Becky says:

    Some goals for my husband and I for 2008:

    ~$4000 into each ROTH and continue contributions to our 401k’s
    ~$100/paycheck toward our emergency fund
    ~as much extra cash as possible into our “new siding” fund , goal of about $4000 so we can get siding put on in the spring of 2009

    Good luck on your goals, everyone!

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  15. Stephanie says:

    Hmm, this has made me decide to make a chart for myself…with reasonable money goals as well as those stretch goals.
    Let’s see how they go!

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