Jacob’s 2014 Financial Goal Setting and Automation

Happy New Year Everyone! It is that time again. That’s right – time to set my financial goals for 2014. It’s hard to believe that 2014 is already upon us. Just one more year, and we’ll be to the year that they traveled to in the movie, Back to the Future II (one of my personal favorites!).

I do this once every year as part of my goal to create what author David Bach calls a Purpose Focused Financial Plan. The goal of this system is to employ money in your life in a way that matches your life values and dreams. It is a very cool idea!

You can read more about my journey to create this system at the following links – Creating a Purposed Focused Financial Plan and My Personal Finance Journey’s Investment Strategy.

As is the case with many things in life, a good portion of financial goals are long-term commitments requiring attention in each passing year. As such, you might see many similar goals that I was trying to or did achieve in 2013 listed for 2014. I am perfectly fine with having some of the same goals year-to-year, provided that I believe in the causes they represent (which I ponder each year, and all of the ones listed below definitely do meet that criteria!). 

2014 is looking like it will be a challenging year. Not in a bad/negative way, but just in regards to experiencing a lot of changes with me getting married, finishing my PhD and potentially moving if a job presents itself out of town, and potentially selling my condo. And, for someone like me who is accustomed to controlling my finances with an exacting hand, change requires me to take a significant amount of time to learn about new things before acting.

So, here goes, the unveiling of Jacob’s 2014 financial goals. In addition to the normal listing and associated commentary that I traditionally include in this type of post, I have also included the various automation steps that I take to maximize my chances of carrying out all of these activities. So, enjoy, and I look forward to reading any comments you all have!

 

Short Term (Less Than 1 Year) Goals

• Continue building, optimizing, and balancing a Three-Legged Stool for Retirement.
  • Since I am in the 15% tax bracket (and recently confirmed that I will likely be again for 2014 taxes), my strategy is to first finish off my individual Roth 401k contributions for 2013.
  • Normally, contributing to a Roth IRA would be the first priority since Roth IRA contributions can be taken out for any reason and at any time. However, since I only have a few more thousand $ to go, and Roth 401k contributions for 2013 are only accepted until April 2014, this step got bumped up in the priority order.
  • Anyhow, after that, I will move towards maxing out my Roth IRA contributions for 2014.
  • My next move will be to contribute an equivalent amount in an after-tax investment account in order to have money that is accessible for needs prior to retirement. This is particularly important this year since, if my fiance and I move after graduation, we will likely be looking to purchase a house and need at least a little bit of cash for a downpayment.
  • If I still have any money available for investing after the steps above, I will then focus on contributing to my Roth 401k account for the 2014 tax year.
  • Since my graduate school fellowship income does not count as “earned Income” for retirement plan contribution purposes, I have to make sure that my combined Roth IRA and 401k contributions for 2014 are less than my net blogging income minus the deductible part of self-employment taxes.
  • Automation Step: No automation needed for this specifically, since automation will be handled in steps below. 
    
• 1) Contribute maximum allowed for 2013 Roth Individual 401k. This amounts to me needing to contribute $1,819.08 more prior to the April 2014 deadline. 
  • Automation Step: Placed a monthly reminder on my Outlook calendar from now until April 2014 to  max out my 2013 contributions. The timing of this reminder is directly after I receive my monthly paycheck. 
• 2) Contribute $5500 (or ~$458 per month) to my Roth IRA with Vanguard this year (maximum allowed, which remained the same from last year. I was hoping it would keep increasing like it did from 2012-2013! ).
  • Automation Step: Placed a monthly recurring reminder on the 23rd of each month (day I get paid) to contribute $5.5k to Roth IRA for 2014 / a monthly minimum of $458.
• 3) After maxing out Roth IRA for 2014, contribute equivalent amount ($5,500) in taxable Vanguard mutual fund account.
  • Automation Step: Placed a monthly recurring reminder on the 23rd of each month (day I get paid) to invest money in this fashion after contributing to my Roth IRA for 2014.
• 4) If have additional funds available after completing #3 above, contribute >=20% of blogging income to Individual Roth 401(k) with Vanguard.
  • Automation Step: Placed an automatic monthly recurring reminder on my Outlook calendar for this purpose.
  • With this goal, I will need to keep in mind the maximum contribution allowed given the level of “earned” income I realize in 2014 (not including graduate school fellowship income).
• Reach short-term net worth target for this year (1.10X my current net worth).
  • Automation Step: Already have monthly reminder on Outlook calendar to calculate net worth each month. 
    
• Maintain target 6-9 months of expenses in cash reserve emergency fund in Dollar Savings Direct account.
  • Automation Step: Already have monthly reminder on Outlook calendar to calculate net worth each month, and the current level of my emergency fund is included in this.
  • However, with me getting married in September 2014 and then potentially moving and/or starting a new job shortly after, I added a reminder to re-evaluate my emergency fund level in the October 2014 time frame.
• Put together Purpose-Focused Financial Plan together with fiance, including long-term and short-term financial goals. Also read up on marriage/couples/family finance books as well. 
  • Automation Step: Placed a recurring monthly Outlook reminder on my calendar to tackle this item beginning in the late March time frame, when the 1st-of-the-year busyness and tax return preparations have calmed down a bit.
• Organize new joint / individual financial accounts for fiance and I. Integrate our two finances together.
  • Automation Step: Set up bi-weekly Outlook calendar reminders for this purpose so I can stay on top of this.
• Evaluate whether or not to rollover some of tax deferred retirement accounts to Roth status since tax bracket low.
  • Automation Step: Added a recurring Outlook calendar reminder every 2 months to evaluate whether this type of conversion is appropriate/feasible or not.
• Rebalance mutual fund portfolio to meet asset allocation target %’s (70% equity, 30% fixed income overall).
  • Automation Step: Already have monthly reminder on Outlook calendar to calculate net worth each month, and included in this is a check on asset allocation levels.
• Keep maintaining zero-based budget that I have set up to strategically manage my personal finances.
  
  • Automation Step: I already automatically do this every month, so no further automation step is required.
• Towards end of 2014/after get married, evaluate if need to obtain life, disability, and long-term care insurance.
  • Automation Step: Placed monthly recurring Outlook reminder on my calendar starting in November 2014 to evaluate this action.
• Have draft of my will + fiance’s will (which she needs to draft) reviewed by a lawyer. Also try to use same lawyer to create wedding contract for our wedding in September 2014. 
  • Automation Step: Placed recurring monthly reminder on Outlook calendar to follow through on the items involving a lawyer. 
• Create and keep updated a Google Document listing out all of fiance and I’s account types/locations in event either of us is injured. 
  • Automation Step: I just created this Google Document for my personal accounts and added a reminder to have fiance update the doc with her accounts in the next few months. In addition, I added a recurring yearly reminder to update the Google Doc as things change periodically.
• Continue to save $50 per month for trip to Grand Canyon or Niagara Falls as part of freedom life values account.
  • Automation Step: Created an automated monthly transfer from my checking account to a saving account set up for this purpose at Ally Bank.
    
• Invest $500 in Microloans with Microplace.com to support Latin American micro entrepreneurship. This equates to $42 to invest per month.
  • Automation Step: Placed recurring monthly reminder to process this investment on my Outlook calendar as well as added it to my monthly zero-based budget spreadsheet.
  • Recently, I shopped around for other international microloan providers to see if the 2-2.5% annual interest I am earning with Microplace is competitive, and was quite surprised to find out that Microplace.com was the only provider that offers an actual interest rate return on investment.
  • The majority of the other providers are set up where the money from individual lenders is a donation, not an investment. There are also several that offer return of principal, but not an interest rate. Interesting stuff!
  • In another twist of events, as of Jan 14th, Microplace has stopped accepting new investments. Thus, I’ll have to invest my money elsewhere.
• Invest $25 each month ($300 total for year) in Lending Club A Safety Grade Person-2-Person loans.
  • Automation Step: Set up monthly auto transfer to Lendingclub account for $25, starting Feb 3rd, ending Jan 5th, 2015. Also, placed recurring reminder on outlook calendar to select a lending note each month, day 15th.
• Donate $1,500 to Multiple Sclerosis Foundation in 2014 (5% of take-home pay in my graduate school research assistantship job).
  • Automation Step: I already have this money saved up and ready to donate, so all I need to do is to process the contribution. Pretty easy here! 
• Fund raise $5000 for MS 150 bike event in June 2014.
  • Automation Step: Fundraising is a pretty manual process, and I am pretty good about remembering to do it. Thus, no automation step is needed. 
• Save 3% of take home pay each month (after taxes) for Dream Account.
  • Automation Step: Set up automatic monthly transfer for the correct amount from my checking account to my Dream Account located over at Capital One 360. 
    
• $30 per month save for doing running races / bike rides as part of health life values account.
  • Automation Step: Set up automatic monthly transfer from Bank of America checking account to Ally Bank life values savings account.
    
• $20 per month save for buying fresh vegetables as part of health life values account.
  • Automation Step: Set up automatic monthly transfer from Bank of America checking account to Ally Bank life values savings account.
• Save ~20% of (blogging income minus amount of income deferred to Individual 401k with Vanguard plus untaxed graduate fellowship income from my research job) in a DollarSavingsDirect.com online savings account in preparation for 2014 taxes and to pay quarterly estimated taxes.
  • I just ran some predicted numbers, and it appears that even with me getting married and potentially starting a job later this year, I will very likely remain in the 15% marginal tax bracket. Therefore, saving 20% of my income for unpaid taxes / estimated tax payments still seems appropriate.
  • Automation Step: Evaluating my required unpaid income tax savings is already a part of my monthly business transaction consolidation, so no further action is required there. However, I just added a reminder to re-evaluate my 2014 tax bracket after I finalize the details/salary of the job I will start later this year. 
• $30 per month save for trips to visit friends/family in other states as part of friends/family and freedom life values account.
  • Automation Step: Set up automatic monthly transfer from Bank of America checking account to Ally Bank life values savings account.
• $10 per month save for purchasing food for backpacking trips in the Blue Ridge Mountains once a month as part of health life values account.
  • Automation Step: Set up automatic monthly transfer from Bank of America checking account to Ally Bank life values savings account.
• Execute any business tax deductions I can for 2013 taxes.
  • Automation Step: No automation needed, as I have secured a good accountant to help me with my 2013 tax return, and she is familiar with the types of business deductions I want to process. 
    
• Send out 1099-MISC for staff writers for 2013-2014 taxes.
  • Automation Step: Not needed since I am already in talks with accountant to send these out by the Jan 31st, 2014 deadline.  
• Use 1% home value home maintenance fund to fix various small things that are broken around my condo after 3.5 years of use. These things include a closet door off the hinges, the light-switch in the bathroom not working all the time, the bathroom towel rack holder coming unscrewed, and some pipes under the sink that need to be re-caulked. This will especially be important if we sell our condo this year in the event of a move. Once I get these things repaired, I will then need to replenish the depleted funds in the home maintenance account.
  • Automation Step: Placed a recurring monthly reminder on my Outlook calendar to look in to this item.
    
• Execute 4 estimated tax payments for blogging + graduate research fellowship income on the following dates – 1) April 15, 2014, 2) June 16, 2014, 3) Sept. 15, 2014, and 4) Jan. 15, 2015.
  • Automation Step: Placed reminder of calendar on each of dates above + a reminder 1 month before each date to allow lead time to send in payment. 
• Maintain a total of $1600 for health expenses for dogs we adopted (for annual health checkup, Frontline/Interceptor, and miscellaneous health emergencies/treatments needed.
  • Automation Step: Placed recurring monthly reminder on Outlook calendar to check that this account balance stays at $1600 (level it is currently as well).
    
• Help friends become debt-free.
  • Automation Step: Placed recurring monthly Outlook calendar reminders to follow up on their current balances, monthly payments, interest rates, and to advise them on best path forward. 
• Continue investing in long-term content growth of blog.
  • Automation Step: As part of my normal monthly zero-based budgeting process, I always check to make sure the correct amount of savings for staff writer payments is present, so no further automation steps are needed here.
• Determine if it is more efficient to file taxes jointly or separately once fiance and I get married in September 2014. Also optimize (minimize) tax bracket by balancing tax-free and tax-deductible/deferred retirement savings.
  • Automation Step: Added reminder on calendar to evaluate this in December of 2014.
• Save >50% of after-tax / take-home income. 
  • Automation Step: No additional automation step is needed for this goal since saving is incorporated elsewhere.
  • In 2013, I was able to save 55.38% of my take-home income, so I am hoping to continue this trend!
• Save $1 per day in Making Future Child a Millionaire Account, invested in the Vanguard Total World Stock Market ETF. 
  • Automation Step: Unfortunately, Vanguard taxable ETF brokerage accounts do not allow you to schedule automatic transfers. Therefore, I had to set this up manually. Each month as part of my zero-based budgeting efforts, I will manually initiate a transfer for $31 to my account. Next, I placed an automatic monthly reminder to invest the money in the Total Word ETF above several days after the deposit has been made.
• Save $10 per day as a sneaky trick to stash away even more money. 
  • Automation Step: Already have this automated. The way I do it is to set up automatic weekly transfers 5 days a week for $10-$20 to my Capital One 360 Savings Account. $10 per day on Monday, Tuesday, and Wednesday, and then $20 per day on Thursday and Friday to make up for no transfers on the weekend.

 

Mid-Term (3-5 years out) Goals:

• Continue contributing maximum allowed to Roth IRA and Individual Roth/Traditional 401k each year using dollar cost averaging.
• Reach intermediate net worth target (~2.2X my current net worth).
• Own a rental property by 2018.

 

Long-Term (greater than 5 years out) Goals:

• Obtain a net worth of $1,000,000.
• Own a home free of mortgage payments.
• Own a vacation home in the mountains or a ski resort.
• Accumulate enough funds not have to work, but will probably anyways because I would get bored. 

How about you all? What goals have you laid out for yourself in 2014? What technique do you find is most effective in holding yourself accountable for your goals you set?  

Share your experiences by commenting below!

***Photo courtesy of http://www.flickr.com/photos/pickinjim/525129498/sizes/l/

How To Make Your Own Luck With Your Finances

The following post is by MPFJ staff writer, Catherine Alford. Cat is a freelance personal finance writer who blogs at www.BudgetBlonde.com. 

I used to think that luck was just – well – luck! As in, isn’t is so lucky that those people won the lottery or picked the right stock at the right time?

However, what I’ve realized over time is that you can actually create your own luck when it comes to your finances. It might not be “lottery luck,” but with a few simple steps, you can ensure that you remain lucky throughout the course of your financial life.

Here are some common phrases that I hear with respect to money and luck.

There are a lot of misconceptions about finances and how people reach their financial goals. I’m sure you’ll be able to relate to hearing some of the comments below, and hopefully you’ll be able to see the same pattern as I did, which is that those who are “lucky” in terms of money actually worked hard to get there first!

 

 1. Mr. Smith is SO lucky that he got to retire at 55!

No, Mr. Smith isn’t lucky.

Mr. Smith lived below his means. He probably drove an old truck, didn’t upgrade his life when he has the ability to, and invested slowly over time. People like Mr. Smith are perhaps lucky that they aren’t prone to materialism or lucky that they have a knack for saving. The truth is, though, that people don’t retire early because they are lucky. They typically retire early due a lifetime of planning and hard work. I can’t tell you how many people reach retirement age and wish they had the ability to quit working. Don’t wait for luck or envy those who are able to. Everyone has the ability to do this. It just depends on how you plan.

 

2. They are SO lucky they get to go on vacation! I haven’t been on one in years!

People tend to go on vacations in two ways. They either put it on a credit card and have debt problems later or they save up for it ahead of time.

Sure, many of us are fortunate to get vacation time or fortunate to have a little bit of extra income to buy a plane ticket here or there, but is that really luck? I would say that “vacation luck” is self-created. We either get a break from work because we worked hard to earn it or because we saved up for it. The people who don’t take vacations over the course of several years make conscious decisions not to take one or not to make saving for one a priority. Remember, we can make our own luck when it comes to our money because we control what we do with it!

 

 3.    You’re so lucky you get paid to work from home.

This is one I’ve been hearing a lot lately, ever since I started working 100% for myself.

Every time someone says it to me, I vacillate between cringing and feeling grateful that I have the ability to do what I do. However, there is nothing “lucky” about getting paid to work from home. It’s hard and scary and challenging to break out on your own and become self-employed. I didn’t just wake up one day and decide to stay in my pj’s and write from the couch just because I’m a lucky girl. It happened because I worked for it. I always like to point out that there’s no magic formula to what I do. Anyone with enough discipline can do the exact same thing. They just have to want to. Again, there’s nothing lucky about it. To be honest, though, it is kind of lucky that I don’t have to wear blazers anymore.

 

 4.    They’re so lucky they started investing early.

Investing is one area where you can definitely make your own luck with your finances.

Sure there are people who pick the right stocks or inherit stocks that their grandparents owned. That’s fortunate for them. However, if you don’t have any sort of trust fund, it’s up to you to make your own luck. You can do this by being conservative with your investments, starting now if you haven’t started yet, and teaching the next generation about responsible investing. The truth is, information about investing is open to anyone and everyone. Regardless of your education level, there are free seminars, books, and blogs that can teach you about investments. No one is lucky because they started investing early. They were simply willing to take the time to learn about it and took action to make sure it was a part of their lives.

Ultimately, when it comes to your money and long-term wealth, there aren’t shortcuts for most of us. Yes, there is a small sect of people who come from very wealthy families or who inherit something they weren’t expecting. However, for the average person with a normal job, it’s up to them to create their own opportunities in life and finances.

So what will it be? Are you going to be lucky or not?

What steps are you taking to create your own financial “luck?”

Share your experiences by commenting below! 

***Photo courtesy of http://www.flickr.com/photos/timypenburg/5283231645/sizes/l/

First Comment Sharing Your Favorite Charity Gets The Organization $34.84 – Community and Charity 10% Monthly Blog Income Give Back # 28 – January 2014 Edition

The 10% give back giveaway fun rolls on for the month of January. Can you believe we’re already in to a New Year?!

In case you missed the first 27 editions of the 10% Blog Income Give Back, after doing some thinking at the beginning of October 2011 about what direction I want this blog to grow and evolve towards in the future, I decided that any income made from this blog would have more significance to me at a personal life values level if I knew that a portion were being given back to the following places:

• 1) The readers – Obviously, without you here to read my articles and interact with my ideas, there would be no blog in the first place (let alone blog income). As such, it is only fitting that you receive a portion of any blog income.
• 2) Charitable organizations – If you’ve read my blog before, you know that I’m a big believer in donating a portion of my money to charity. Each year, I donate between 5-10% of my income to the National Multiple Sclerosis Society as part of the Bike for MS fundraiser that I do. Beyond the good that is done by donating your money, getting used to contributing to charity is also a good practice to emulate the actions of affluent individuals (T. Harv Eker discusses this in his book, Secrets of the Millionaire Mind, which I would definitely recommend reading if you have a few hours).

Because of these considerations, I’ve decided that each month going forward, I’m going to give away 10% of my net (after-tax) blogging income/profit to My Personal Finance Journey readers (5%) and to charity (5%). Listed below is a summary of the results we’ve achieved together thus far through this give back effort:

• After each calendar month passes, I’ll tally up my net blog income and determine what Dollar value correlates to 10%.
• So far, I’ve been very happy with the success of the October 2011 – December 2013 give backs. Listed below is a summary of what we’ve accomplished so far with the give back effort.
  • Current total given to charity = $2,347
  • Current total given to blog readers = $1,078 

 

How to Give $34.84 to Your Favorite Charity Today!

Since business was a little slower in December with everyone getting ready to head out for the holidays, I’ve decided to throw a little variety in to how I do this month’s give back.

Instead of getting entries over a 2-3 week period, here’s how it will go:

The first person (and only the first person) to comment on this post stating the information below will have $34.84 donated to their favorite charity:

1) What their favorite charity is (my one requirement is that they have to accept online donations via PayPal or credit card), and

2) Why they like this charity

Let the fun begin!

***Photo courtesy of http://www.flickr.com/photos/a03575/3632344397/sizes/l/

Can Too Much Debt Keep You From Getting a New Job?

The following is a post by MPFJ staff writer, Kevin Mercadante, who is a professional personal finance blogger, and the owner of his own personal finance blog, OutOfYourRut.com. He has backgrounds in both accounting and the mortgage industry.

When it comes to hunting for a job, we tend to concern ourselves with factors that are most closely related to the search itself. This includes preparing the most effective resume, developing winning interviewing techniques, having the right experience and credentials, and a list of convincing references.

But with background checks becoming ever more comprehensive, our efforts to land a job can be materially affected by personal factors, such as credit profile. It’s even possible that too much debt can keep you from getting a new job.

Why would employers care how much debt you have, and why would it be a factor in determining whether or not to hire you?

 

High debt levels affect credit scores – negatively!

Many, perhaps most employers today are pulling credit before making a job offer. The quality and volume of debt that you have are factors. The amount of money that you owe does affect your credit scores. This is most commonly demonstrated through credit utilization – the percentage of outstanding debt to available credit.

A high level on this calculation, especially above 80%, can have a negative effect on your credit score. That could bring your score down low enough that an employer might do a deeper review of your report, rather than assuming all is well.

Credit reports indicate the reasons for the given credit scores. Credit utilization is one of the primary components of your credit score, and this will be indicated as a reason for the low scores. If the score is low, the employer might scan your credit report to see exactly how much that you do owe, and determine it to be unacceptable.

Ironically, current debt levels can be a bigger detriment than a prior bankruptcy or foreclosure. While major negative credit events are in the past, a high level of debt represents an ongoing problem. An employer may see it as a complication that could affect your performance if hired.

Depending upon the employer, either the low credit score or the high debt level could be an obstacle to an employment offer. Employers likely have a certain range within which they consider both acceptable credit scores and debt levels. If you exceed those parameters, you may be declined for employment.

 

Too much debt could interfere with your ability to do your job

An employer might decide that the amount of debt you have to be so high that it will interfere with your ability to do your job properly. This is not an unreasonable consideration either. If you have a substantial amount of debt, it is likely having an effect on other areas of your life. In fact, a very high debt level could easily become the dominant factor in your life. That would most certainly have an effect on your ability to do your job.

Worry causes stress, and stress can interfere with your ability to do your job properly and efficiently. An employer may decide that you are not the right candidate for the job, particularly if there other qualified candidates with less substantially less debt. It’s simply one of those factors that could get in the way of the job search in a tight market.

 

High debt could indicate inability to manage finances

Even without knowing the reasons for your high debt level, an employer could conclude that you have an inability to properly manage finances. This can be an even bigger problem if you’re applying for a job that will involve budget responsibilities. The employer may decide that you’ll bring the same poor money management skills from your personal life into the job and the budget you will oversee.

A lot of people are in debt for reasons beyond their control, including medical debt, business failures, or taking care of sick or incapacitated relatives. If you your high debt levels are attributable to any of these factors, you might want to let the employer know in the interview. Absent that information, the employer may conclude you’re simply bad with money. That is the usual conclusion absent evidence of the contrary.

 

High debt could make you vulnerable to criminal activity

This is the darker side of high debt levels. They may see your high debt levels as a potential incentive to participate in criminal activity in order to pay off your debt. This could include openness to bribery, participation in financial scams, or even outright theft from the company itself.

This does not mean that all employers will view a high debt level as the potential for criminal activity. Much will depend upon the employer’s previous experience. If they have hired people in the past with high debt levels who have gone on to commit criminal activity, they will understandably be reluctant to do so again in the future.

Once again it’s very important that you’re proactive if you have high debt levels. If you know that the employer will run a credit check, volunteer the information even if you’re not asked. You should be prepared to disclose the reasons why, but you should also be willing to share any documentation you have that proves your point.

***Photo courtesy of http://www.flickr.com/photos/debt-consolidation/

Year-End 2013 Blogging and Personal Goal Review

Back in January of last year, I laid out some personal goals for my life in general and blogging goals for My Personal Finance Journey for the 2013 year.

As I experienced in 2012, (click the following link to view my 2012 blogging goals and year-end progress updates) by tracking these goals periodically, it provides me with more accountability and visibility to what I am doing and where I want to go with this community/blog and in my life. As such, the purpose of this post is to review how I did in 2013 in reaching the aims I set up for myself.

As far as life goes from a personal and blogging perspective, 2013 was a mixed year, with both successes and moderate shortcomings on my goals.

• Personally, it went very well, with me making good progress in my PhD program, doing a lot of bike riding to stay in good shape, and getting engaged in March.
• From a blogging perspective, we had some great successes, with record levels of blogging income/charity give back, very consistent content from our staff writing family, and some great asset allocation and asset location (Three-Legged Stool for Retirement) analyses being conducted.
• However, as usual, graduate school has taken quite a bit of time/effort, and as such I wasn’t able to spend quite as much time on my blog (and we’ll most likely see this reflected by a good number of “Did not accomplish” status updates below). In addition, Google made some algorithm changes that I believe kept down my overall traffic levels. But, such is life I suppose, so I’m not too disappointed about it all!

So, here goes! An update on how I did in 2013 for my blogging and personal goals, with updates highlighted in bold text below. This should be fun!   

The blogging goals for 2013 were as follows:

• Read and interact with (comment) 25 partner blogs per week.
  • Did not accomplish.
  • For the first part of 2013, I had a great Virtual Assistant (VA) that was helping me with commenting. However, she went MIA about half way through the year, and I haven’t heard from her since.
  • I have since been trying to find another VA to fill this role so we can continue with this goal.
• Continue active participation as a proud Yakezie Personal Finance Blog Network member.
  • Done.
  • However, I could stand to do a little more interacting in the forums in the next few weeks.
• Publish 3-5 blog posts per week.
  • Done, thanks to MPFJ’s great staff writers! Thanks everyone! 
• Obtain 600 unique visitors per day average by end of 2013.
  • Did not even come close to accomplishing. 
  • I was hopeful at mid-year that moving to WordPress would magically increase my traffic since everyone had told me that it improves your SEO, etc.
  • In general, I have been very satisfied with the move, and I feel like my reader engagement has increased. I even recently got an increase in Page Rank as well.
  • However, I think that due to some Google Search Algorithm changes that were made in 2013, my search engine traffic decreased. Since that is the biggest driver to my overall traffic levels, I believe that’s what caused overall traffic to be lower.
• Host all personal finance blog carnivals (Festival of Frugality, Cav of Risk, Carnival of Personal Finance, Totally Money, Carnival of Retirement, Carnival of Financial Planning, Carnival of Passive Investing, etc).
  • Done. This was fun!
• Continue organizing Carnival of Passive Investing in 2013. Offer hosting of the 12 editions for 2013 to guest hosts. If you’re interested in hosting, shoot me an email! You can view the schedule by clicking here. Also for the Carnival in 2013, my goals are to a) continue getting passive investing authors involved and b) start reaching out to financial journalists (maybe from Kiplinger’s or Money Magazine, etc) and/or financial reporters on TV.
  • Done. Thanks to all of our guest hosts so far this year! We were able to fill up all of the slots. 
• Continue to spread word about benefits of passive investing over active investing. Get involved in BogleHeads forums as well.
  • Done.
  • I did pretty well on this one in the 1H2013, but ran out of time in the last half of the year. Hopefully, I can improve upon this next year.
• Write 1 guest post for another blog per month to expand reach of my ideas.
  • Did not accomplish.
  • I slacked badly this past year on the guest posting! 
• Create an eBook on one of the following topics – a) Ways to be Frugal, b) Investing Strategy, c) Steps to Buying a Home, d) Getting out of Debt, or e) Financial Prioritization / Account Hierarchy. Once create book, market it afterwards.
  • On track.
  • I made quite a bit of progress putting together an e-book on “31 Days to a Financial Revolution” over the 2013 Christmas Break.
• Possibly transfer blog to WordPress hosting. First, migrate Carnival of Passive Investing for practice before do My Personal Finance Journey.
  • Done.
  • I transferred MPFJ.com to WordPress self-hosted back in June 2013. It was quite a bit of work, but I am very satisfied with it so far. I may switch Carnival of Passive Investing at some point, but since it isn’t my main site, I don’t feel as big of a need to move it.
• Create and publish monthly newsletter – “Intelligent Financiers Newsletter.”
  • Did not accomplish/did not have time. 
• Attend blogging, marketing, finance, or real estate classes at local community college or nearby conference locations. Particularly, I would like to take a class or two to learn more about Search Engine Optimization (SEO) and also how to publish a book in hard-copy.
  • Done.
  • I attended a local blogging conference in the Spring of 2013 called BlogVille 2013. I learned a lot of cool things!
• Submit blog posts to blog carnivals every two weeks to expose my blog to new audiences and build links.
  • 1/2 Done / 1/2 Did not accomplish.
  • However, here lately, I have not been doing so well with this because my fiancé, who was helping me submit articles to blog carnivals, ran out of free time to help me. So, I have since found and have been training a Virtual Assistant to help with this activity. Has worked well so far!  
• Successfully execute Tour de Personal Finance in July this year. For 2013, plan further ahead of time to gather more entries (max = 64) and get some sponsors involved.
  • Done.
  • The event went amazingly well this year!
  • $1400 in cash prizes were doled out to the event winners and the charities they selected.
  • I was also very glad that we were able to get 64 participating blogs this year and also had Debt Free Direct on board as our platinum sponsor!
  • You can read all the details in the recap post by clicking here.
  • I look forward to hosting the event again this year in 2014!
• Do Easy Like Sunday Morning Roundup and Recap 1X per month minimum.
  • Did not accomplish.
  • Ran out of time for this one!
• Continue social media presence on Twitter and Facebook. I would also like to try to incorporate some use of Pinterest as well.
  • 1/2 Done / 1/2 Did not accomplish.
  • Similar to the blog carnival post submitting goal above, I haven’t been executing as well lately because my fiancé ran out of time to help me do this. However, I am in the process of screening a Virtual Assistant to help me with this promotion.
• Feature one Cheapskate Jake Frugal Ramblin’ per month.
  • Did not accomplish. 
  • Did not have time for this one.
• Run 10% Blog Income Give Back Project each month. Continue teaming up with local charities to build relationships. Focus on visiting the charity personally after each give back concludes. Try to get other sites interested in doing something similar and also begin to look for sponsors for 1-2 of the giveaways.
  • Done.
  • The current cumulative total given to charity = $2,298, and the current cumulative total given to blog readers = $1,028
• Start and grow personal finance group speaking service. Generate ideas for speaking topics. Offer to local community first and build from there. Create page promoting service on My Personal Finance Journey.
  • Did not accomplish/did not have time.  
• Continue to try to find other ways to help people with their finances away from the blogosphere. One thing I’ve applied to do is become a volunteer credit counselor with Credit Education.org. However, I have not heard back from them, even after submitting my application multiple times. Another option I could pursue is offering general advice on finances from a life coach perspective – lifestyle, frugality/money-saving tips, life values and dreams, etc. You have to be very careful in making it clear to not offer advice on specific financial instruments since you must have the correct certifications for that (which I do not have). This might be hard for me to resist delving in to the specifics, but it could be fun! I would definitely need to learn more about the legal aspects first though.
  • Did not accomplish/did not have time.  
• Start building my family’s genealogy as time allows (this is a lower priority goal).
  • Done. I was able to get several posts up on this site.
  • I decided that my day job is such that I don’t think I will ever have enough time to focus on building the content on secondary sites in any significant way (at least for now). As such, I want to just focus on MPFJ /Carnival of Passive Investing, and the family genealogy site as time allows.
• Network with other bloggers, with a particular focus on physically meeting them to build relationships. The bloggers I have met in person so far are really interesting people!
  • Done.
  • I attended a blogging conference in town earlier this spring, and got to meet some very interesting bloggers and social media / website experts.
• Incorporate affiliate resources in to posts where relevant.
  • Done. 
  • However, I still haven’t found a way to discuss affiliate-related content very often on this site, and to date, really haven’t made any money with this.
• Negotiate advertising deals for other sites.
  • Done.
  • I’ve been enjoying doing this quite a bit!

 

In addition, my personal goals for 2013 that I set were as follows:

• Get to bed at midnight or earlier.
  • Done.
  • Been doing very well at this! I don’t seem to have the energy to stay up until 2am every night anymore! haha
• Take 1 day off per week (Saturday or Sunday) completely from doing work on my blog or from my graduate research job to keep my mind feeling more “fresh.”
  • Done.
  • Instead of taking an entire day off each weekend, I’ve been focusing on getting out and doing a big bike ride or hike once per weekend. Afterwards, I generally am pretty tired, so even though I might answer a few blogging emails or do a few things, I don’t work all that much.
  • However, with the weather lately being colder, I haven’t been able to get out as much. But, that is pretty normal.
• Become better at following the Getting Things Done email/work flow management system to focus my time and energy on high value projects first and avoid distractions.
  • Done, but could always stand for some continuous improvement/reminder to do this. 
• Hike or bike ride 1 time per week with a group.
  • Done. 
• Do a bike race if my Achilles starts to feel better.
  • Did not accomplish/delayed.
  • At the end of the summer, my Achilles was feeling much better after getting a new custom foot orthotic made for my flat feet. I could ride for 6 hours a single day on the weekend and not have it hurt. However, I would feel it slightly the next day, and would have to take several days off before biking again.
  • Because of this, I decided it was time again to go in for another bike fit since I hadn’t had one done since 2006 in Boulder, CO (and after all, technology probably has improved since then!).
  • I was pretty satisfied with the bike fit, as the guy was able to confirm that I didn’t have any leg length discrepancies or other biomechanical defects except for a crookedly-healed dislocated shoulder I got back in 2005 at a college party.
  • After making some pretty big changes to my position during the bike fit, it took me a couple weeks to figure out that the position he prescribed would not work for me. Therefore, I set about changing my position to a point where I could ride again.
  • After making some changes again, I found a good position I could live with. However, the cold weather soon hit, and I haven’t ridden much since then.
  • Thus, all of this is to say that this goal will have to be pushed off to next year!
• Hike more with the Charlottesville Hiking Group.
  • Did not accomplish since I mostly did biking on the weekends during the nice-weather months.
• Read one personal finance book per month.
  • Done and surpassed.
  • I’ve probably averaged about 2-3 personal finance books per month over the course of 2013.
• Go backpacking one time per month in warmer months.
  • Did not accomplish since I was so involved with bike riding on the weekends this year.
• Take a trip out-of-town 1 time per month. Visit sister’s new home in Raleigh. Visit one of the beaches in Virginia.
  • Did not accomplish.
  • As usual with the biological/cell-based nature of my experiments in graduate school, it’s been hard to get totally out of town during the weekends.
• Learn how to build a group speaking business.
  • Did not accomplish.
  • However, I did recently purchase a book that discusses the ins-and-outs of building a group speaking business.  

How about you all? How did you do in accomplishing your personal/professional goals you set for yourself in 2013? 

Share your experiences by commenting below!

Start Your Christmas Club Now to Enjoy the Holidays Next Year

The following post is by staff writer, Sally. Sally is the blogger behind TinyApartmentDesign.com, a blog about interior design, money, real estate, good reads and general life thoughts. Enjoy! 

When the excitement of Christmas Eve and Christmas day are over, I get out of the holiday mode pretty fast and start looking forward to the new year, with the days getting longer and warmer and heading into my favorite season: sweet, sweet summer.

Christmas was never huge in our family, although we did celebrate it. But, in my fiance’s family, Christmas is a Really Big Deal (RBD for short). It’s an RBD for everyone to get together and enjoy baking and cooking together, and share plenty of gifts with each other.

I have to admit that every Christmas is hard for me. I always feel short on cash and can’t get gifts I really want to get for people who are wonderful and giving to us all year long.

So this year, even as I put our lovely Christmas memories away until next year, I am going to be thinking about Christmas for the next 11 months with a Christmas Club.

 

What is a Christmas Club?

A Christmas Club (or Hanukkah or any other holiday) is the simplest way to put away money for the holidays.

While you can do it electronically, the best way to put aside this money is using cash.

Why? Because this fund is totally different from your other savings goals, and even if you don’t spend the whole amount next Christmas, you can set aside that cash to get a head start on the next year’s Christmas Club. The best part is that when you start in January, you hardly have to save any money at all. I know that $800 is more than enough for me to get gifts for both of our immediate families, something special for my fiancé and still have some money left over a fun tradition like going to see the Nutcracker ballet. That’s only $73 a month for the next 11 months. By saving for 11 months, you’ll have your complete Christmas Club fund by December 1 and can start early on your holiday shopping, although some people might consider that a late start.

 

But Spending Money on Christmas Gifts is Stupid!

OK, I hear you.

You don’t have to get gifts at all or do anything special for the holidays and you can save that $800. That’s true. In the same reasoning, weddings are stupid, showers are stupid and celebrating birthdays and anniversaries is as asinine as it gets.

I’ve got some very anti-tradition people in my family who think all celebrations are for mindless sheeple and we should just enjoy and celebrate every day of our lives. I appreciate that view.  It’s helped me become the person that I am and I am not afraid to question traditions or rituals or the way things are simply because “it’s always been that way”.

But, I don’t hate traditions. I like that Christmas is an RBD in our lives. It’s not always going to be 100% perfect or super-happy-fun all the time, but we’re going to try, darn it! And from an anthropological perspective, these traditions and rituals reinforce our social circles, remind us of the people we value in our lives, including children, family and friends.

So, while it’s important to be an independent thinker and be able to assess the value of traditions and assumptions, it’s equally important to enjoy your life. And if giving gifts at Christmas is part of that, join the Christmas Club now to make it easier on your mind and wallet.

How about you all? Have you ever tried setting aside money periodically throughout the year to use for buying Christmas/holiday presents?

Share your experiences by commenting below! 

 ***Photo courtesy of freedigitalphotos.net

How an Emergency Fund Can Make You a Better Investor

The following is a post by MPFJ staff writer, Kevin Mercadante, who is a professional personal finance blogger, and the owner of his own personal finance blog, OutOfYourRut.com. He has backgrounds in both accounting and the mortgage industry.

When it comes to investing, talking about an emergency fund is just about the least exciting sub topic possible.

After all, an emergency fund mostly sits in the bank gathering interest – and not much of it at that. But few people realize the real importance of an emergency fund from an investment perspective, and how it can actually make you a better investor.

Better investor as a result of having an emergency fund? How is that possible? There are several ways…

 

Creating and maintaining a basic “grubstake”

We can think of an emergency fund as something like “seed money”. It’s the money that you would use to rebuild your finances if you lost everything you had. Until the 20th century, this was often referred to as ”hocking the family jewels”. Since most of us don’t have a treasure trove of jewels safely hidden away in a strongbox, an emergency fund is really the next best thing. Having it well-stocked is a way of making sure that there are “jewels” that can be sold in the event of an emergency.

 

The safest of all safe investments

Every investor should have a certain percentage of their portfolio sitting in safe assets. Exactly how much you will have will depend upon your age, your risk tolerance, and financial factors beyond your portfolio, such as income level, expenses and debt. But no matter what those levels might be, it’s absolutely essential to have at least some money sitting in safe investments.

Emergency funds have the advantage of being the safest of all safe investments. You typically will invest them in nothing more exotic than a savings account or bank money market fund, or in certificates of deposit. It’s not that you can’t invest part of your portfolio in money market funds or certificates of deposit – or even U.S. Treasury securities – but an emergency fund has certain aspects the make even safer than those.

For one thing, since an emergency fund is typically held a local bank, you actually will have physical access to the money in the event of an emergency. It will also be fully covered by FDIC insurance. Similar safe investments held in brokerage accounts have neither the easy access nor the FDIC insurance.

This isn’t to say that an emergency fund will satisfy the need for safe assets in your investment portfolio. You should have some such assets in your basic portfolio, in addition to your emergency fund. But your emergency fund is that “cookie jar” that you keep outside your portfolio, and well beyond the potential for risk investments of any kind.

That kind of safety gives you an extra margin of protection against market shocks and less-than-perfect investment decisions.

 

Keeping your head in a short-term crisis

One of the silent benefits that an emergency fund has for investors is that it can enable you to keep a clear head at a time when you may be facing financial difficulties on the home front. Imagine you lost your job, but had no short-term savings to cover bills until unemployment checks started coming in? You probably would make some panic moves that you would live to regret later.

Just having an emergency fund available enables you to avoid that panic. That will give you the ability to maintain your long-term investment plans despite short-term disruptions in your income, or sudden spikes in your expenses. An emergency fund acts as a psychological insulator between you and your investments. And that is exactly what you need in order to successfully invest over the long haul.

 

Avoiding disturbing your investment portfolio for living expenses

On a more practical level, an emergency fund can keep you from having to raid your investment portfolio in the event of a crisis. If a crisis were to occur, and you have no emergency fund, you might be tempted to tap your investments in order to raise cash for survival purposes.

If you’re mostly or entirely invested in equity investments at the time, it could force you to liquidate those positions at a bad time. That can result in taking investment losses that you will lock in permanently as a result of selling your positions.

An emergency fund can provide you with the ready cash that you’ll need to meet short-term emergencies and avoid having to disturb your investments at all. At a minimum, the emergency fund will provide you with enough money to enable you to make rational decisions about how you get through the crisis at least in the near term.

 

“Sleeping money”

There’s much to be said for having your savings and investments arranged in such a way that you can get a good nights sleep on most nights. An emergency fund will help you to do that. Not only will it provide you with a margin of safety in the event of an income disruption or a large expense, but it can also be a welcome safe harbor in the event of market slide that brings down your investment portfolio.

A good nights sleep will enable you to have a clear head, which will make it easier for you to develop a strategy to deal even with problems within your portfolio. It does this by removing the prospect of immediate threats from your life by providing you with a cash cushion.

The next time you get annoyed at the low return you’re earning on your emergency fund, stop and think about the many ways that the fund enables you to be a better investor then you would be without it. Even if it doesn’t provide a good return on your money, an emergency fund is still a perfect investment in so many other ways.

How about you all? How much of an emergency fund do you like to keep on hand?

Aside from the direct benefit of using it to pay for short-term expenses in the event of an emergency, do you feel that having an emergency fund has enabled you to be a better investor?

Share your experiences by commenting below! 

***Photo courtesy of http://www.flickr.com/photos/79818573@N04/8719057729/

Year-End 2013 Current Asset Allocation and Net Worth Growth

Hello there everyone!

The past few months have been quite eventful, with planning to finish my PhD by next August, starting the job-finding process, starting an internship with the University’s licensing / commercialization office, getting engaged/planning our wedding for September 2014, and trying to submit a journal article to the ACS Journal of Chemical Biology here in the next few weeks. 

Anyhow, with 2013 now being just a memory, it’s time to review the progress on my net worth realized the past year! So, without further ado, let’s get started – first with reviewing my net worth growth during 2013! As always, if you have any questions, please ask via email or commenting below!

As I’ve mentioned before, the goal of this running net worth and asset allocation progress update series is two-fold:

• 1) To share how I (as a fairly normal non-financial professional) approach various financial issues that come at me throughout life so that you can use my learnings to assist you in your financial decision-making, and
• 2) To make me more accountable in sticking to my various financial goals that I set forth by periodically evaluating my status and making adjustments.

Overall, I would say that 2013 went amazingly well from a financial perspective. I’ve been able to make a lot of progress towards my personal, professional, and financial goals (even raised a total of $11,000 for the MS Society with my MS Bike Ride!).

In particular, I’ve been able to efficiently leverage my three-legged retirement stool accounts (Roth IRA, taxable account, and Roth 401k). And, I’ve been able to invest significantly in my blogging goals with the help of several amazing staff writers on the site.

On top of that, the overall market did very well during the past 12 months!

With all of the up and down that has occurred, let’s take a look and see how it affected my net worth progress…shall we?

 

Liquid Net Worth Growth (Not Including Condo Nor Blog/Graduate Fellowship Unpaid Income Tax Savings)

In October of 2011, I had to make a fairly significant change in how I calculate my net worth and asset allocation percentages each month. The change pertained to the cash I consistently save up throughout the year in a high interest online savings account (Dollar Savings Direct) in order to pre-pay self-employed or unpaid (from my graduate research fellowship) income tax to the government in the form of quarterly tax payments. What was happening was that the balance in this tax savings account (which was being counted in to the cash portion of my asset allocation) was becoming too large, and it started to skew my asset allocation calculations.

To remedy this, since October of 2011, I’ve started using a system of calculating my liquid net worth, which includes all of my various equity and fixed income holdings but excludes 1) my equity and debt related to my condo and 2) the amount of savings I have accumulated so far during the year earmarked to pay the tax man. I’ve decided that doing the analysis in this fashion helps me remain more objective in making financial decisions without being influenced by assets that are needed for shorter-term living/tax expenses.

Keeping this important change in mind, let’s continue…

 

Overall Liquid Net Worth Growth

From 27-December-2012 to the beginning of Jan, 2014, the S&P 500 index increased 28.09%. Pretty awesome by any standard you think about really!

During that time period (January-December 2013), my liquid net worth (excluding condo ownership and unpaid tax savings) increased 31.27%, which seems pretty good since I do not have full equity exposure in my portfolio (only 70% equity – more details below).

With an ~30% increase in the overall market, several important things come to my mind for investors going forward:

• Now is NOT the time to get greedy with stocks!
• Now is NOT the time to try to “predict” that the market will go down!
  • Historically, investors are VERY GOOD at being too heavily invested in the stock market at times when the market is overvalued and not being invested enough when the market is undervalued.
  • In addition, historically, investors are VERY BAD at predicting the direction of the market.
  • This cycle of bad decision-making greatly decreases investor returns.
  • Because of this, it’s important to remember to not stray from your target asset allocation balance between equity and fixed income investments.
  • This ensures that you:
    • 1) Do not shoulder more risk than you can tolerate (if a market downturn occurs) and
    • 2) Do not fall in to the trap of trying to predict the market direction (if the current growth continues).

 

Condo Equity Growth

I still currently have 19.88% home ownership in my condo, with this accounting for 13% of my real net worth (so net worth subtracting the condo loan – this is different from the net worth figure discussed above).

As I continue to learn more and more about advanced personal finance topics, I have become quite sure about one thing – I am not the biggest fan of aggressively building up as much home equity as is possible. While I am sure that home ownership is a great idea for personal finance success, I don’t believe that pre-paying a mortgage far beyond what is required is a very good investment (unless the mortgage loan interest rate is very high).

Why is this? Because the money that you pay over and beyond what is required (even though it is saving a little bit on interest, which is tax-deductible, so not really that much savings) is not gaining you any type of return whatsoever – it is essentially money stuffed under a mattress.

Instead, I have been taking the money I have leftover and maxing out my Roth IRA, then saving an equivalent amount in an after-tax account, and then using any that is then left over to contribute close to the maximum allowed for my Individual Roth 401k account.

 

Permanent Portfolio Performance Update

In November 2011, I became fascinated/interested enough in Harry Browne’s Permanent Portfolio asset allocation strategy in order to give it a small trial run with my own money (less than 1% of my liquid net worth). As such, I’ve decided (for fun!) to start tracking the performance of my small ETF version of the Permanent Portfolio in order to compare it to how the market is doing.

While holding the Permanent Portfolio from the end of December 2012 to the beginning of January 2014, the Permanent Portfolio decreased in value by 4.88%. During this same time period, the S&P 500 index increased by ~28%. So, looks like it did not perform better than the general equity market during this time period. However, one really cool thing I’ve noticed about this portfolio is that it is indeed very stable – with it never dropping or gaining more than 1% or so in any given month. Just as Harry Browne predicted, eh?!

In addition, it is also very apparent that the strategy has A LOT of tracking error with the overall market. So, ask yourself whether you think you would be OK missing out on big gains in the stock market like the one over the past year in exchange for more stability before committing significant money to the Permanent Portfolio.

We’ll continue to keep an eye on this portfolio in 2014 and beyond. Should be interesting to see what happens!

 

Making Future Child a Millionaire Update

In December 2013, I researched/published a post about how regular folks can make their current or future children millionaires by saving $1 per day for 23+ years and then letting the money sit and grow until the child retires at age 65.

In this same post, we examined whether an annuity or regular/taxable mutual fund account would be a better home for these savings. What we saw was that a regular mutual fund would yield more savings in the end because of the favorable long term capital gains taxation that you receive.

Anyhow, I decided that I would set one of these accounts up for my future child now since it is so easy to do. Because I didn’t want to commit $3000 to fulfill the minimum investment requirements for a Vanguard mutual fund, I decided to put these savings in to a taxable ETF account, containing the following ETF – Vanguard Total World Stock ETF (VT). I choose this ETF because it has a low expense ratio, good exposure to US + international stocks, and most of all, I didn’t already own this ETF so I could maintain segregation of this account from my existing ones.

The current balance is $59 (1 share). We’ll keep monitoring this one and see how it grows over the years! 🙂

 

Review of Current Asset Allocation (Excludes Condo and Tax Savings)

• Overall Fixed Income / Equity Allocation
  • Currently, 31% of my net worth is invested in fixed income instruments (cash or bond funds), and 69% is invested in equity.
  • This is only 1% off from my targets for these categories of 30% (fixed income) and 70% (equity). So, it is still within my +/- 5% allowable band limits.
• Equity Allocation
  • In the equity portion of my portfolio, 71% is invested in US Domestic Equities with the remaining 29% being held in international equities. 
  • This is within the tolerance banding limits of my equity breakdown targets of 70% and 30%, respectively, for US Domestic and international holdings. So, no action is needed at this time regarding this component of the analysis.

While the overall percentages for these categories look fairly good, a detailed look (table/listing below) at the allocation breakdown reveals the real story and provides for better analysis of the current state.

Remember: In order to maximize the benefits of your asset allocation strategy, a red flag goes off if your current % allocation in a category is greater than +/- 25% change from the target allocation. This is my trigger that I need to rebalance that aspect of my portfolio.

 

Analyzing my current asset allocation percentages, it appears that my current asset allocation is aligned with my target levels within the +/- 25% band limits. Thus, no action is needed at this time.

 

Three-Legged Stool for Retirement Allocation

I added a new financial goal added during the 1st half of 2013 to continue building, optimizing, and balancing a Three-Legged Stool for Retirement.

The idea behind this strategy is to target having a 1/3 split between tax-free, tax-deferred, and taxable accounts by the time you hit retirement in order to have flexible control over your income sources so that you can optimize your tax bracket each year.

Since I am in the 15% tax bracket, I first maxed out my Roth IRA for 2013.  My next move was to contribute an equivalent amount in an after-tax investment account in order to have money that is accessible for needs prior to retirement. Having completed that, I am now working towards maxing out my contributions to a Roth Individual 401k with Vanguard.

Listed below is my current asset location split between the three-legged stool account types:

• Tax-Deferred = 33.4%
• Taxable = 44.1%
• Tax-Free = 22.58%

On one hand, I have been very satisfied with how I have been able to increase my three-legged stool tilt towards tax-free and taxable accounts and away from tax-deferred accounts in 2013, focusing especially on contributing to my Roth IRA and Roth 401k.

However, as you can see by the percentages above, I still have a ways to go to increase my tax-free allocation. This is especially important for me right now since I am in a very low tax bracket in graduate school (but also have fairly limited cash in terms of being able to pay the income tax to convert tax-deferred money to tax-free accounts).

 

My Next Moves For The 1H2014 Time Frame

2014 is going to be a big/busy/involved year for me financially, emotionally, and intellectually. Because of this, it’s tough to fit in all of my next financial moves in to one small section of a post. However, just off the top of my head, I need to get started with the following things:

• Begin fundraising for the 2014 Tour de Vine National MS Society event.
• Send out 1099-MISC for blog contractors by Jan 31^st, 2014.
• Use my 1% home value home maintenance fund to fix various small things that are broken around my condo after 3 years of use. 
  • These things include a closet door off the hinges, the light-switch in the bathroom not working all the time, the towel rack in the bathroom needing to be re-attached, and some pipes under the sink that need to be re-caulked. Once I get these things repaired, I will then need to replenish the depleted funds in the home maintenance account.
• Finish contributing to an Individual Roth 401k Account with Vanguard by the April tax deadline (maximum amount, taking Roth IRA contributions and deductible portion of self-employment tax in to consideration).
• After finish contributing to Roth 401k for 2013 tax year, begin contributing to Roth IRA for 2014 tax year.
• Reconcile / finalize business income and expenses for 2013, print out records of all transactions, start getting together information for 2013 tax return.

• I will also need to process the $1500 I have already saved up for a personal donation in support of my ride.

 

Wish List

• At some point, purchase the Vanguard Total Stock Mkt Idx (MUTF:VTSMX) to replace S&P 500 index fund, whenever more money is needed to increase my domestic large cap asset class holdings. This gives better, broader diversification to the US stock market.
  • I finally was able to exchange my 2 – S&P500 Vanguard index funds for the total stock market fund above during the last week of December. Great success!

How about you all? How did you progress with your net worth in the July-December 2013 time-frame? What are your thoughts about the strength of the market right now? Do you think it’s getting too overvalued? 

What financial challenges are you currently facing?

Share your experiences by commenting below!

2013 Year-End Financial Goals Review

Happy New Year everyone!

I hope you all have enjoyed the holidays, were able to relax with family and friends, and got to have some champagne to bring in the New Year!

For the past week and a half, my fiancé and I have been on the road and in the air away from our home in Virginia. First, we celebrated Christmas with her family in Northern Kentucky (a little south of Cincinatti). Then, we headed out to my childhood home in Arkansas for my sister’s engagement party and to celebrate New Year’s. Currently, we are on our way back to Virginia to get started working again after the weekend.

Back in January of last year, I set my financial goals for 2013. Since the year is now officially finished, I figured it would be a good time to sit down and take a few minutes to review how I did in reaching or NOT reaching (in some cases) the various targets I set for myself. 

Overall, I would rate 2013 as top-notch financially and personally. I got engaged back in March of 2013, and am planning to finish my PhD by August of 2014 and get married shortly after. On top of that, the stock market has increased over 25%! Nice!

So, here goes, a review (in bold below) on how I did in 2013 reaching my financial goals. Enjoy, and I look forward to reading any comments you all have!

 

Short Term (Less Than 1 Year) Goals

• Contribute $5500 (or ~$458 per month) to my Roth IRA with Vanguard this year (maximum allowed, which increased $500 in 2013 compared to the $5000 maximum allowed in 2012!).
  • Done. I finished maxing out these contributions in around the May timeframe. Yahoo!
• Reach short-term net worth target for this year (1.42X my current net worth).
  • I’m getting a lot closer, but not quite there yet.
  • I need an increase of about 10% more from where I am now, so that’s definitely better than a 42% increase needed back in January of 2013! 
• Maintain target 6-9 months of expenses in cash reserve emergency fund in Dollar Savings Direct account.
  • Done. 
  • With me getting married in 2014, it will be interesting to see if this level changes / if I need to re-evaluate my savings level.
• Rebalance mutual fund portfolio to meet asset allocation target %’s (70% equity, 30% fixed income overall).
  • Done. Going well. 
• Put together a will and have it reviewed by a lawyer.
  • Have put together a will, but still have not gotten it reviewed by a lawyer. Need to though! 
• Continue to save money for trip to Grand Canyon or to see Niagara Falls.
  • Done.  
• Invest $500 in Microloans with Microplace.com to support Latin American micro entrepreneurship. This equates to $42 to invest per month.
  • Done. 
• Donate $1,150 to Multiple Sclerosis Foundation in 2013 (5% of take-home pay in my graduate school research assistantship job).
  • Done. I actually donated $3,000 this year. Yah! 
• Fund raise $7500 for MS 150 bike event in June 2013.
  • Done and surpassed. I ended up raising over $11,000 total this year for the MS Society, which puts my total in the past 5 years at above $25,000. Nice! 
• Save 3% of take home pay each month (after taxes) for Dream Account.
  • Done.
• $30 per month save for doing running races / bike rides as part of health life values account.
  • Done.
• $20 per month save for buying fresh vegetables as part of health life values account.
  • Done.
• Save ~20% of (blogging income (if any) minus amount of income deferred to Individual 401k with Vanguard plus untaxed graduate fellowship income from my research job) in a high yield online savings account in preparation for 2013 taxes.
  • Done.
• Apply for new graduate research fellowships since the one I have from the NSF will run out in 2014 (and need to apply for new ones about a year ahead of time).
  • Canceled / no longer applies.
  • Since I am graduating by next August when my NSF Fellowship runs out, I will no longer need to apply for a new fellowship to take its place. It seems to have worked out nicely!
• $30 per month save for trips to visit friends/family in other states.
  • Done.
• $10 per month save for purchasing food for backpacking trips in the Blue Ridge Mountains once a month.
  • Done.
• Contribute at least 20% of blogging income to Individual Roth 401(k) with Vanguard.
  • Done.
  • According to the account hierarchy priority order, in 2013, I first maxed out my Roth IRA before starting to contribute to my Roth 401k with Vanguard.
  • By the time of the 2013 tax deadline, I will have saved 100% of my blogging net income in my Roth IRA and 401k combined. Nice!
• Execute any business tax deductions I can for 2012 taxes.
  • Done.
• Use 1% home value home maintenance fund to fix various small things that are broken around my condo after 2.5 years of use. These things include a closet door off the hinges, the light-switch in the bathroom not working all the time, the bathroom towel rack holder coming unscrewed, and some pipes under the sink that need to be re-caulked. Once I get these things repaired, I will then need to replenish the depleted funds in the home maintenance account.
  • Did not accomplish.
• Execute 4 estimated tax payments for blogging + graduate research fellowship income on the following dates – 1) April 15, 2013, 2) June 17, 2013, 3) Sept. 16, 2013, and 4) Jan. 15, 2014.
  • Done.
• Save $111 per month until have a total of $1600 for health expenses for dogs we adopted (for annual health checkup, Frontline/Interceptor, and miscellaneous health emergencies/treatments needed. I will have the $1600 total after March 2013.
  • Done.
• Help friends become debt-free.
  • On track.
• Continue investing in long-term content growth of blog.
  • On track. 
• Continue building, optimizing, and balancing a Three-Legged Stool for Retirement
  • Done.
  • Since I am in the 15% tax bracket (and recently confirmed that I will be again in 2013), I first maxed out my Roth IRA for 2013.
  • My next move was to contribute an equivalent amount in an after-tax investment account in order to have money that is accessible for needs prior to retirement.
  • Next, I began to work towards contributing as much as possible to a Roth Individual 401k with Vanguard.
  • Since my graduate school fellowship income does not count as “earned Income” for retirement plan contribution purposes, I had to make sure that my combined Roth IRA and 401k contributions were less than my net blogging income minus the deductible part of self-employment taxes. It appears that by the tax deadline for 2013, I will be able to contribute the maximum possible to both of these retirement accounts. It has worked out well.

 

Mid-Term (3-5 years out) Goals:

• Continue contributing maximum allowed to Roth IRA and Individual Roth/Traditional 401k each year using dollar cost averaging.
• Reach intermediate net worth target (~2.2X my current net worth).
• Own a rental property by 2018.

 

Long-Term (greater than 5 years out) Goals:

• Obtain a net worth of $1,000,000.
• Own a home free of mortgage payments.
• Own a vacation home in the mountains or a ski resort.
• Accumulate enough funds not have to work, but will probably anyways because I would get bored. 

How about you all? How did you do with your financial goals for 2013? What techniques do you find are most effective in holding yourself accountable and on-track for your goals you set?  

Share your experiences by commenting below!

Sneaky Tricks To Actually Accomplish Your New Year’s Resolutions

The following post is by MPFJ staff writer, Catherine Alford. Cat is a freelance personal finance writer who blogs at www.BudgetBlonde.com. 

Wouldn’t be amazing if we could actually accomplish our New Year’s Resolutions? As in, wouldn’t it feel incredible to completely, 100% succeed in meeting or exceeding them?

Well, if you want to actually make some good goals and have 2014 be the most amazing year yet, I have some sneaky tricks that will help you to get there.

Here they are below:

 

1.    Make Month-to-Month Resolutions

A year is definitely a long time. I mean, can we really promise ourselves to not say a curse word for all 12 months of it?

Or, can we really expect ourselves to stay out of a fast food joint for the entire year? I mean, there are always exceptions and special circumstances that cause us to break our resolutions, and if you’re anything like me, breaking resolutions causes you to beat yourself up.

We don’t need that this year!

So, let’s make some month-to-month resolutions. Maybe January can be the month of flossing your teeth every day. Perhaps February can be the month of reading one book that you’ve really wanted to enjoy. You can really do anything for 30 days, so maybe if you set a time limit on your resolutions, they will actually get accomplished!

 

2.    Pick Something Fun to Accomplish

Why do your resolutions always have to be so awful?

I mean, why give up eating bread when you can make resolutions that are fun and exciting? For example, you can make a resolution to keep up with movies this year. I am horrible at movie conversation. At a party, when someone says a movie quote and everyone laughs, picture me standing there with a blank look at my face. I have no idea what you are talking about when you give a movie quote, and it’s something I should work on!

Another example is keeping up with old friends, which is my husband’s New Year’s resolution. My husband has gotten so busy and so caught up with medical school that he rarely has time to send an e-mail to some of his best friends growing up. He’s made it his goal to do a better job of staying in touch with them in 2014. Everyone loves getting e-mail and snail mail, so that should be a relatively painless and fun resolution to work on this coming year.

 

 3.    Make Resolution Teams

One tip I always give people is to share your resolutions with others, but my ultra sneaky tip is to actually get on a “Resolution Team.”

For example, don’t just tell someone you want to lose weight. Actually find someone that shares that same goal, and work together with them to get ‘er done. If you want to give up drinking Diet Coke, don’t just tell your coworkers. Try and rally them and make everyone who shares an office with you do the same thing.

Resolutions are much easier to keep when you stamp out temptation, so be the person who gets everyone else excited about goals so that you can accomplish something amazing.

 

4.    Make a Resolution That’s Teeeeeny Tiny

Don’t get me wrong; big goals are great.

I love it when people say they’re going to pay off 500k worth of debt. However, the bigger the goal, the harder it is to make it happen.

So, why not start with something teeny tiny? I’m talking about drinking an entire bottle of water every day or trying to touch your toes every day. This type of resolution takes pretty much zero time and zero effort. I’m not trying to encourage you to be lazy about your resolutions. I’m just trying to show you that you can feel accomplished and give yourself a pat on the back for actually sticking to them if you make goals that are reasonable.

 

 5.    Set a Goal You’ve Already Halfway Finished

I know you might think this is cheating, but there’s no sneakier way to accomplish your goal than to pick one that’s already halfway done!

So, if you’ve started organizing your garage, make a resolution to finish it. If you’ve already changed out two of the doorknobs in your house, then make it a goal to fix the rest of them. Basically, it’s a sure fire way to feel accomplished because the goal has already been started and you already know how to do whatever it is that you’ve chosen.

Ultimately, setting New Years Resolutions is definitely a great thing to do every year. However, the reason people fail to accomplish them is because they make it too hard on themselves! Next year, be sneaky! Try the tricks above so that you can feel great and tell the world that you stuck to your goals and did something awesome to improve yourself.

How about you all? What are your 2014 resolutions? Are you going to be sneaky and accomplish them? Share your experiences by commenting below! 

***Photo courtesy of http://www.flickr.com/photos/photoann/6605711959/sizes/l/