Thursday, December 15, 2005

2006 Financial Goals & Objectives

My goals and objectives for 2006 merge my personal finance and voluntary simplicity beliefs. My goal is to payoff my condo as quickly as possible while maintaining: maximum annual contributions to retirement savings, a $20,000 cash emergency reserve, and enough cash to have some fun in 2006.

My starting point for these objectives is my December 2005 net worth summary. Let me provide some context for these goals:

401k contribution. The maximum 401k contribution was increased from $14,000 in 2005 to $15,000 in 2006. I must adjust my paycheck percentage contribution to achieve the maximum contribution by next December. My current contribution amount is still set at the $14,000 level which I achieved with my December 3 paycheck.

IRA contribution. My money market account currently contains approximately $28,000. In January, I will transfer $3,000 to my Vanguard IRA.

Extra mortgage payments. I plan to send $200 every two weeks to my mortgage company for extra principal payments. That will result in $5,200 annual payments toward the principal. I am hoping my annual bonus, which is paid in February, will be sufficient for the remaining $4,800. Read about my decision to pay down my mortgage.

Money Market Account Balance. I shall keep my emergency fund, vacation fund and kayak fund consolidated in my Vanguard money market fund account. I am taking a kayak course in the spring and will look to purchase a used boat and all the necessary kayaking accessories by May 2006 in preparation for a 10-day summer kayak trip in Canada. I will discuss my decision to maintain my cash at Vanguard in a subsequent post.

Monthly Credit Card Payment. I use the Chase Cash Plus Visa for all my monthly expenses: phone, electric, gas, groceries, etc. I pay the card off each month. In 2005, I charged less than $1,200 in only 3 months out of the year. The other months averaged around $1,400.

I will provide monthly updates on my progress toward these objectives and the effect on my net worth and mortgage balance. Stay tuned for updates!

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