It’s been a full week and we are loving our new home. We are still waiting for the new furniture for our living room to arrive, along with some bar stools for the kitchen, but other than those items, we are all settled. (If you ever want to find out just how much stuff you have – move! Whew.)
Obviously, now that we have a house payment, our goals and plans for 2010 have changed. Instead of aggressively funding my retirement account, like I did for the past two years, we now plan to aggressively pay down our mortgage debt. That being said, we still plan to save for retirement, kids’ college funds, and other long-term goals. Here’s the breakdown –
Retirement Savings – 15% of household gross income
Education Savings – $2000 per child, for a total of $6000, per year
Cash Reserves – Increase from current 6 months worth of expenses to a full 12 months worth of expenses
Automobile Replacement Fund – $250 per month
Debt Reduction – Pay mortgage payments early and on time, with a goal of paying off 15 year mortgage in 7 years, or less
As first time home buyers, we will receive the first-time home buyer tax credit. This money, once received, will be immediately deposited into our ING Direct Orange Savings Account
. We dipped into our cash reserves in order to make a larger down payment, and I want to rebuild those reserves as soon as possible.
As for retirement savings, a portion of that will be in my 403(b), a portion will be in my wife’s pension plan, and the rest will be in our Roth IRAs. For the next 5 to 7 years, my primary focus will be on paying off the mortgage, but I’ll also work hard to invest wisely and save for the future.
What a drastic change to your financial situation compared to a few years ago. I wonder if you would have even had the option to buy a house back then (I’m guessing not). Seems like a great reward for how hard you’ve worked to change your financial life!!! Congrats again on the new house. I know I really like owning a house! I think it’s an awesome goal to pay the mortgage off so quickly. Sure beats putting it towards credit card debt!
Hazzard
I’d apply that $8000 first time homebuyer tax credit directly to the principle of your house. That would save you thousands in interest down the line and help you achieve the goal of a 7-year/15 mortgage.
Congrats on the house! Sounds like an exciting time in your life and I’m sure your organization will help the hysteria.
Good luck and I’m excited to follow your updates!
Austin @ Foreigner’s Finances