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.