Currently, we live in a house provided by my employer.  We love our house, but at some point in the future, we’ll want to buy our own house.  To that end, I’ve created a new savings goal.

For the past six months, I’ve been tracking housing costs in our local area.  We have picked out three or four subdivisions that we really like, and we’ve calculated our ‘maximum amount we’ll pay for a new home’.  While I’d love to pay cash for the house, that may not be realistic.  But, I do hope to put at least 20% down so that we can get a conventional loan and avoid PMI.

I have run several calculations, including pricing the loan for 15 and 30 years, raising and lowering the interest rate, and manipulating the down payment.  For our price range, the ‘worst case scenario’ for our mortgage payments would be roughly $2,000 per month.  (The actual payment would be calculated when we took out the loan, and would be based on exactly how much we borrow and rates at the time we take out the loan.  According to my calculations, the monthly payment will be somewhere between $1200 and $2000.)

For the next twelve months, I’ll ‘pretend’ to have a mortgage.  By paying myself $2000 a month – stashing it away in my ING Direct Savings Account – I’ll accomplish two goals.  First, I’ll prove to myself that I can make these payments.  And, second, I’ll rapidly build a substantial down payment.  Win, win!

If I save $2,000 a month for 12 months, I’ll have $24,000.  If I add that to the $7,000 already in my non-retirement savings, I’ll have $31,000.  But, since I’m not a fan of the number 31, I’ll fix my goal at $33,000.  My actual monthly goal will be $2166.66.

I’ll track my progress over at the No Credit Needed Network.  Here’s my current chart – SavingsNCN.  This new goal replaces my old goal (of saving $16,000 this year).  I just never could get excited about that old goal, but I’m stoked about the new one.

Do you create goals?  If so, how agressive are you?  I like to set super-agressive goals and then push myself.

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Reworking My Savings Goal And Thinking About Buying A House

I’m a huge fan of Dave Ramsey and his “Baby Steps” (pdf). I love the way that he sets out seven, basic steps for debt reduction, retirement, and financial security. Personally, I think that the most important Baby Steps are the first two: Have a $1000 mini-emergency fund and then use a debt snowball to payoff your debts. But, I also realize that Dave’s plan for retirement, savings, and investing may not fit every situation. For instance, Dave suggests putting 15% of income into retirement. In 2007, I plan to put 40% of my income into retirement accounts. So, with that in mind, I was thinking about ways that I ‘crawl’ or ‘run’ between the ’steps’.

Crawling: Doing The Little Stuff

I fix my own lunch, I have a basic satellite television package, I pay per-text charges on my cell phone, not a flat fee, I look for bargains at the grocery store, keeping a grocery store price-book, and I use coupons and buy generic.

You get the picture… By looking at the small things and thinking about ’small purchases’, I accelerated my debt reduction and savings accumulation. No matter how much money I have in savings, I ALWAYS think about ways to SAVE MORE. Ever penny really does count. I am amazed that so many people make fabulous salaries but are always BROKE. Want to know why? They refuse to focus on the ‘little stuff’. There are two types of people: Those who see a penny on the ground and keep on walking and those who see a penny on the ground and pick it up. Me? I’m going to pick it up, heads or tails!

Running: Doing The Big Stuff

I am fully-funding my 403b, two Roth IRAs, and two ESAs. While I enjoy the idea of saving $10 a month doing something “frugal”, I also enjoy “paying myself first” and putting away money in my retirement accounts. I like to create big goals, reach for them, and I’m not afraid to fail. While I think that it is important to manage every dollar, it’s extremely important, to me, to fully-fund these long-term investment accounts. Why? Preparation for the future, baby.

Every dollar that I put into my 403b is like a 25% BONUS to my salary. Why? I don’t have to pay taxes on that money until I withdraw it. Every dollar I put into my Roth IRA grows TAX FREE. So, I fully-fund BOTH accounts so that I can diversify my tax exposure AND prepare for the future.

Conclusion

I know plenty of people who live very modest, even frugal lives, who never focus on funding retirement accounts or thinking (much) about their futures. It is so important to look at TODAY, but we must occasionally think about TOMORROW! Conversely, there are those ‘dreamers’ among us who are waiting for ‘their ships to come in’ and they never worry about basic, fundamentals like “spend less” or “work more”. I used to be this type of ‘dreamer’. I was always looking for that magic paycheck that was just around the corner. The truth is, we must learn to crawl, take steps, and then run. Do the little things, focus on the basic plan, and then sprint ahead when you get the chance!

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Baby Steps Rock But It’s Also Fun To Crawl And Run

I have 8300 dollars in my savings account. I have 8300 dollars in my savings account. I HAVE EIGHTY THREE HUNDRED DOLLARS IN MY SAVINGS ACCOUNT!!!!!!!

Now, this may or may not be a big deal to you, but for me, this is HUGE. Until last year, I was in debt, had no savings, and I felt anxious, every, single, day. I worried about my future, I worried about losing my job, I fretted over every expenditure, and I felt like I was going nowhere. Now… Man, EVERYTHING is different. I feel in control, confident about my future, ready to face a financial emergency, and pumped about saving more and more. Am I rich? Far, far, from it. But, I am preparing myself TO BE rich. I’m doing smart things. In fact, here are the smart things that I am doing, right now:

I have a budget.
I save money.
I don’t borrow money.
I pay my bills on time and early.
I balance my checkbook.
I am contributing to my retirement, and will increase my contributions after I have my 20K emergency fund.
I now longer worry, I plan, and take action.

That’s it. Simple, easy, practical. That’s how I like my life.

If you are overwhelmed, and you feel like there is too much info out there, or that you are too “stupid” to do anything about your finances…STOP!!! There is hope. You must learn to grasp hold of today, forget about yesterday, and plan for tomorrow. Quit borrowing money. Get out of debt. Make a plan. Enjoy the simple, everyday pleasures of life. Stop driving around in your retirement (that stupid new car you bought!!!). Think, think, think, think, think.

Far too many people float around, with no insight into their personal finances. Only YOU can make a decision to change. Only YOU can send those payments in. Only YOU can say no to that item you do not need. Only YOU can stay on budget. Balls in your court. What are YOU going to do?

ME April 2005: -11,510.22 dollars
ME May 2006: 8300 dollars
Total Change: 19,810.22
13 Months: = 1500 dollars a month! 50 dollars a day!

You can do this. You can do this. You can do this. You can do this. You can do this.

You must do this.

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What A Difference 13 Months Can Make

So, in all the hustle and bustle of maintaining the 3 sites, working, parenting my 2 kids, enjoying my marriage, and leading FPU at our church, I MISSED my 1 year anniversary here at No Credit Needed! My first post was April 6, 2005, and if you want to check out my beginning debt balances, you can click here. 11K Plus. Now, about a year later, we have no debt, 7K in savings, and 2K in our checking. So, basically, that’s a 20K Plus change in our net worth. Yay!

I want to thank all of you for visiting, reading the blog, joining the NCN Network, listening to the podcasting, typing emails, and leaving comments. You guys rock! I hope you will check out my blogroll, and visit all of the blogs that I like. (If you’d like to find your way onto my blogroll, just hit me up with a comment or an email, and I’ll gladly check out your site… No promises, but if it’s a decent site, I’ll be glad to add it.)

As for my current goals: 20K in savings by 10-10-2006 and then it is on to some serious retirement savings.

(I sent in 200 dollars this week to make a grand total of 7K in savings.)

Last thing, I’ve been able to give out a few ING Direct referrals this week, and I’d love to give out a few more! If you deposit 250 bucks or more, you get 25 bucks and I get 10. Hit me up with an email at ncnblog@gmail.com and I’ll be glad to send you a referral.

Oh yeah, check out the NCN Network page for our April Updates. You’ll be amazed!

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Savings At 7000… Oh Yeah… I’ve Been Here 1 Year

I did not like the look of that uneven amount in my savings account, so I added another 153 dollars for an even 6100 dollars. I have saved over 30 percent of my goal. Yes!

Check out the NCN Network page for my chart. Scroll down the right-hand side for more updates and table/chart combos.

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NCN Savings Update 5A

I received both my federal and state tax refunds this week, and I promptly deposited them in my ING direct savings account. I now have 5947 in savings. To put this in perspective, at this time last year we owed over 11.5k in debt, with NO savings or money in our checking accounts. We were flat broke. Now, we have well over 8k in our checking and savings accounts, with no debts. If you will create a plan, stick to it, and get back on plan after you fall off, you can make great progress. Trust me, this stuff works. Click this link to see my latest chart over at the No Credit Needed Network.

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You’re Safe!

I was able to add 500 dollars to my savings, for a new total of 800 dollars. You can check out my new chart over at the NCN Network. See the link on the right hand side.

Savings money is very, very hard for me, and I don’t really know why. I guess with the burden of the debt removed, I feel less “pressure” to manage my money wisely. I have to force myself to hit the transfer button at INGDirect. Strange.

Oh yeah, for those of you who like the ins and out of “how” the transactions go down, or for those who want to know how INGDirect works, here’s the scoop.

I deposit my check into my local branch bank. I use Wachovia. They have a free checking account, with no minimum balance requirements and no monthly fees. Also, they offer free checking.
When I opened my ING account, I gave them permission to access my Wachovia checking account, via Wachovia’s routing information. This set-up is easy, and takes just a few minutes. (The actual time for the ING account to be completely up and running may vary, and I opened my ING account over 4 years ago, and the application time may have changed a bit since then.)
So, once my check has been deposited at Wachovia, I access my ING account via my web browser by logging into my account. I then schedule a transfer from Wachovia to ING. Most transfers take between 1 and 3 business days to go through. Bam, my money, which was at Wachovia, is now at ING, earning over 3% interest. Now, if I want my money to come out of my ING account, I simply login to ING and initiate a transfer from ING to Wachovia. Please note, whether I want to put money into ING, or take money out of ING, I must use the ING site to initiate either type of transaction. (Push or Pull, so to speak.) It really is very very simple.

(If you have 250 bucks, and would like to sign up with INGDirect, and would like a 25 dollar bonus deposit, send me an email and I will hook you up with a referral. I’ll also get 10 dollars for referring you.)

Oh yeah, it usually takes 1-5 business days for money to be transferred from ING to my Wachovia account. Also, while ING will “have” your money very soon after you send it to them, there will be a 3-6 day waiting period before you can withdraw that same money. So, a pull then push round-trip transaction could take up to 2 weeks, depending on how fast they process both transactions.

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Just A Little Off The Top, Please