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Setting Financial Goals for 2014: Joan’s Mid-January Financial Update

in Joan's Posts, Our Financial Journey, Pay Off Your Debt

determination

Note: This is a post from Joan Otto, Man Vs. Debt community manager. Read more about Joan.

Last month, I was proud to share a look at what I accomplished financially in 2013 as part of my series of regular financial updates.

This month, I want to share some highlights of the current month, and then focus on a look ahead at my financial goals for 2014, along with some suggestions on how you can set your own financial next steps!

Our Very Next Steps

We hit a major one of our “V.N.S.” or very next step goals this month, plus one overall goal that’s worth noting.

  • Hated BoA Mastercard: Our goal had been to get this under $15,000, and this month, its balance dropped to $14,952.09. Next, we’ll aim for under $14,000! When we started tackling our debt in early 2011, this card had a balance of more than $36,000!
  • Total debt paid off: We crossed the 40 percent debt-free mark! Now we’re at 40.41 percent paid off, with $36,238.49 paid and $53,448.74 to go.

Don’t forget that we keep track of all of these debts in summary (complete with V.N.S.) on my “Joan’s Finances” page – so you can see how we’re doing at a glance. Here, I just hit the updates each month.

Financial goals for 2014: Debt reduction

  • Total debt down at least $15,000 from now, and total payoff over $50,000 total, AND total debt-paid-off percentage over 50%. That would put us at $38,448.74 to go, and $51,238.49 paid off. YES. I can’t even imagine how good that will feel!! (If you’re wondering, that would also be 57.13 percent debt-free!)
  • Hated Bank of America Credit Card down at least $5,000. Last year, we came within a couple hundred dollars of that, and doing so would put us under $10,000 total owed on this card. So that’s the highest-focus goal!
  • Reduce total number of debts by one. I’m not sure yet in which direction I’ll go to accomplish this, but we’ve consistently reduced our total NUMBER of debts each year, and that always motivates me like crazy to hit the remaining ones even harder. This is mostly a mental game for me, and one that I’m glad to play.

Other financial goals for 2014

  • Continue to make estimated quarterly tax payments for federal, state and local taxes. (This is kind of a no-brainer, as it gets set aside when I make the money, but at the same time, I want to note it!)
  • Get health insurance. This is a whole post on its own, but suffice it to say a LOT of what I’m working on right now is tied up in this!
  • Pay cash for a second vehicle if needed. This remains an uncertainty depending on some job situations that look to shake out in the next month, but IF we need to add a car, the idea is to do it such that we have no car payments!
  • End year with at least two months’ mortgage in savings. This is in addition to the savings we routinely build up for everything from taxes to medical expenses.
  • Continue tracking our financial progress each month. I’ve been doing that in my own spreadsheets since April 2011, and it feels amazing to see the progress over time.

Shaping your financial goals for 2014

My goals might seem a little haphazard. Some savings, some debt payoff, some to deal with big purchases… doesn’t most financial advice suggest to focus on just one of these things?

Well, yes and no.

To me, goal-setting is about finding out what motivates you. Just like when I talked about fear being the best determiner of the amount in your emergency fund, looking at what scares you – and excites you – is often the clearest road map to your goals.

So for some people, consistency and progress in one particular area will be the most motivational. That’s often the case for me. But this year, with a lot of challenges and changes in front of me in a variety of areas, a mix of things stood out.

If you’d like to set financial goals that work for YOU in 2014, here are some things you might ask yourself:

  • What scares me most about the year ahead? For me, it’s my car situation. That’s why I’m including the resolution of it that I want as one of my key goals.
  • What would make me grin like crazy if I could say it at the end of this year? That’s the reason having one fewer debt in total is on my list. If I can say that I’m down to five debts total to pay off by this time next year, I’ll feel great.
  • What goals are within reach? I’m not a fan of aiming TOO high about yearly goals. I’m actually concerned that my $15,000 is a super-stretch goal, and while I sometimes like those, I like setting goals I know I’m going to hit, too. (This is why the Very Next Step concept is good for me.)
  • What are my nonfinancial priorities? While I didn’t list my own nonfinancial goals for the year here, there are some that would conflict with financial goals I could set. For example, if one of your key values is to travel more this year, you don’t want to cut your travel budget to a point that doesn’t support it, right?

So what are your financial goals for 2014? What strategies did you use to choose the goals that work for you?

I’d love to hear your stories in the comments!

{ 20 comments… read them below or add one }

Dani January 13, 2014 at 9:56 AM

Hi Joan,
I admire your passion about setting goals and wanting to get out of debt, you have been very encouraging. In our case, we are debt free except our house and this year our goal is to pay $2,500.00 extra per month towards the principle on our home. If we are able to complete this we estimate that we could be done by Jan 2017. However, I haven’t factored in any risk and as we all know you never know what’s going to pop up. One addtional goal I would like to add in is figuring out how I can add some savings to a car fund. Not to purchase a car but for repairs and maintenance, I think that is what scares me the most, putting all of our extra on the house and nothing for a car fund. We do have an emergency fund that could probably cover 8 to 9 months of expenses. I’m open to suggesstions!!

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Alan January 13, 2014 at 10:19 AM

Pay off all house remodeling costs (just bought). Rebuild emergency fund. Fully fund 2013 and 2014 Roths. Fund college for both children on their accounts. Fund car purchase. Cut credit cards.
Joan, you are awesome. KickBank of America out.

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Tonya January 13, 2014 at 11:47 AM

I would love to kick Sallie Mae out but not possible. Anybody have suggestions on a large student loan debt. Don’t know where to start. Thanks

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tori January 16, 2014 at 8:27 PM

I am right there with ya… I have 80,000 is student debt….. i feel like i will never climb out… especially in this job market…oh and as a teacher…. :-/

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Cay January 13, 2014 at 12:11 PM

Our main goal for 2014 is to become MORTGAGE FREE. To drive up to TN and be on the Dave Ramsey DEBT FREE show screaming “WE ARE DEBT FREE!!!” We are selling off all we can and applying all monies to the principle only of our home. On paper we should be mortgage free by Dec. Our goal is June. After house is paid off, apply monies to auto fund and fully funding our IRAs. With a special needs grandson and a son-in-law who is out of work, we have not factored in helping our children financially this year. So if an emergency happens, we will rethink our goals of auto and IRA monies for 2014.

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Bilgefisher January 13, 2014 at 1:08 PM

Joan,

Good goals for 2014. I like how you have set goals that will require some thinking and planning to accomplish. All easy goals are less rewarding then challenging goals. Question for you, why no investment goals for 2014? (even those not monetary related, ie learning about different investments)

Jason

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pt January 13, 2014 at 2:14 PM

Your story continues to inspire me.

Pay down 30% of Wellsfargo cc debt (accruing interest).
Pay down 20% of Amex cc debt (no interest until Sept).

Save $200 a month for a dream vacation in August. After August, take excess of those funds and pay off cc debt after the trip.

Thank you!
Phil

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Lori January 13, 2014 at 6:37 PM

I decided this is going to be the year I become non-mortgage debt free or come very very close depending on whether or not I use some funds to do a mortgage refinance.

The plan is to pay off my small credit card and car loan later this month or early next month. That leaves one credit card left to pay off. If I don’t do the refinancing, I should be able to pay it off by its January 2015 due date.

Wish me luck, and best of luck to you, Joan!

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Rhia January 13, 2014 at 6:56 PM

My goals:

1. Set aside enough each month so that I can pay my tax bill easily when it comes in – already calculated an affordable amount which may also lave me with some spare cash left over. Better than not enough!

2. Have £1000 in an emergency fund

3. Get financial advice about consolidating my debts into one loan and if possible – do it!

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Maureen January 13, 2014 at 10:26 PM

My goal is to pay off my 401K loan by the end of June. I’ve created a spreadsheet with all my overtime money that will go into the bank and how much is estimated to be required for payoff by June. That would be 8 months early. I keep telling my husband that I want a paycheck with no loans being taking out of it when the overtime is done in the summer.

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Nique January 14, 2014 at 4:59 PM

Hi Joan,
I have been following this site since llate last year. I stumbled upon MvsD by accident as I was doing some research on finances and debt consolidation.
My husband and I make close to $220K but we are living pay check to pay check. We started getting into debt when my husband was not able to find a consulting position and at the time (2011) I was a stay at home mom caring for our 3 year old. We pretty much went through our savings to pay bills and mortgage and we ended up short selling our house. We now live in a new state and are renting, but it has been so hard to remain afloat financially. We are currently at $32K in consumer debt. One of the credit cards is just over $12,000.00 and they are charging $136 in interest. I want to start putting more money towards this particular card and reduce the amounts that we put towrds the others. i think that I am just over paying in general. Some are so close to being paid off that I just cant help but send in more money. What would you suggest??

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Kalen January 15, 2014 at 4:48 PM

Hey Joan,
Good job on all you have accomplished! I love that you have very specific goals with time-frames and you keep them realistic. I have always believed that the more specific your goals, the more you can accomplish. You are doing an awesome job! Keep it up! I have pages of goals for 2014 and I know many will change and hopefully many will be reached early. I have been very passionate about writing for my blog, getting newsletter subscribers and getting more followers on Twitter. I set goals for the day, week, month and year. I also have some longer term goals. I look at all of them every day.

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Renita January 15, 2014 at 9:18 PM

Joan,
Last year we open several savings accounts designated to plan for quarterly and yearly bills. We was successfully in being able to pay all of those bills when they came do including state tax. We were able to pay off 2 motorcycles and 3 credit accounts using the snowball method. This year we are planing on pay off at least 4 credit cards, build up our emergency plan and preparing for our last child to graduate. One of our goals this year is to get in position to pay our child’s college tuition with a college tuition plan and to take a luxury vacation to Rome and Italy in celebration of becoming empty nesters.

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Tawnee January 16, 2014 at 1:33 AM

Ok, you have motivated me to set SPECIFIC financial goals this year. Our goals for the past 3 years has been to PAY OFF DEBT but that was about it. We have started, funded, depleted, refunded, depleted, refunded, depleted (you get the picture) our Emergency Fund and are doing that again now and we had some success in the last 2 year paying off 3 credit cards and our car payment but we still have significant debt and are working hard to pay it down. But that was the goal. Hubby and I need to sit down and make some specific goals for the year. I think that will help and, at the very least, give us something more specific to celebrate at the end of the year :) Thanks for the inspiration and keep up the good work.

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Nique January 16, 2014 at 2:47 PM

Renita,
What is the “snowball method”? I am still trying to figure out if its best to put more money towards the larger credit cards or put more towards the ones that are a little over $1,300.
I am clueless when it comes to budgeting and finances. Three years ago I never worried about finances. Now, its all I can think of :(

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Renita January 16, 2014 at 7:33 PM

Nique,
It’s when you pay the minimum on the rest of your cards and put extra on one card. Once you get that one paid off you take that monthly payment and the extra payment and add it to the next card. What we did was pay off the smallest balances and then put the minimum from that card onto the next smallest one including the extra payment. Most advisors tell you to do this with the one with the biggest interest rate to help save interest. We did it by the smallest balances which help us get ahead and started the ball rolling. For example, you may have 5 credit cards and Credit Card #4 has a $1000 balance but the interest rate is only 15%, but the other 4 cards have balances over $3000 with interest rate of 20% or higher. Your monthly payment for all cards total $600 a month. You would pay the minimum on the 4 cards and on Card#4 you would pay the minimum and any extra on that card. Once that card is paid off you will take the minimum from card #4 and the extra payment and put that on the next smallest balance. I like using the smallest balance first, because you get to see yourself paying off something in a set period of time and get the ball rolling. I sure you will hear that it’s better to pay the one with the highest interest first to save interest. By paying the smallest balance off first, you see results faster and it keeps you motivated to pay down your debt. You can also search the internet for the snowball method also. I hope this helps and not confuse you more.

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Martha January 17, 2014 at 3:23 AM

I officially cut my ties with the corporate world as of December, and am officially a full-time entrepreneur. In preparing to go it on my own, I worked on getting my expenses down as low as possible. I am now debt free.

My goals for this year are:
- to make enough $ to live on from my one business, so that the profits from the 2nd one can keep on being reinvested. In order to do this, I need to get much better at organizing myself and using my time better. Also I need to get better at setting my own priorities and working with a plan, rather than flitting from task to task and back again.
- to get off expensive COBRA health insurance and get onto a better, cheaper health insurance plan through the State exchange, by the end of March when open enrollment closes for the year.
- to start putting aside an emergency fund as well as a “replace my car” fund, because I really need to

Joan, some day you must tell us why Bank of America is your most hated debt! Just curious…. :)

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Nique January 17, 2014 at 7:33 PM

Renita,
When you say pay the minimum does that include interest?

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Renita January 18, 2014 at 6:23 PM

Most minimum are what the credit card sets it may not cover the amount of interest each month. I make sure we at least pay the minimum and put all the extra on the credit card that we are trying to pay off.

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Nique January 20, 2014 at 1:13 PM

Renita,
Thanks so much for the information. You have been very helpful :)

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