2017 FINANCIAL GOALS Half Birthday Update

Financial Goals are great and so is stopping to smell the flowers and enjoy the summer!

Happy Half Birthday 2017 Financial Goals!!!

It has been some time since I have written here on Even Steven Money, partly due to on-going house improvements, motivation to write, and my extra effort to enjoy my summer.  The reason I started this blog like most is for personal accountability, to my delight it has worked tremendously,  BIG THANK YOU to everyone involved!

Accountability involves creating goals, sharing your goals, and exceeding your goals.  As one of my favorite quotes states:

” If you don’t know where you are today, you will never know where you are going.”

My goals will follow the same format as my previous 2017 Financial Goals post with additional information and updates in Blue along the way.  Because if the internet don’t know about it, nobody does!

Financial Independence Unicorn

2017 Goals Presented by the Financial Independence Unicorn

Max Out Mr. and Mrs. Even Steven 401K, H.S.A.Similar to 2016 we have a goal of maxing out our tax deferred company plans.  This is set up automatically to be taken out with each pay check.  The H.S.A is stretched out for all of 2017, while our 401K is setup to reach our goal before the end of the year, allowing for larger paychecks to close out the year, a strategy I enjoyed in 2016, the wife a little less as she is a big fan of “give me my money now” strategy.  It’s important to explain a little further as why we choose to max out these tax deferred investments first, rather than a Roth IRA or pay off our mortgage for example.

The higher our income the more we pay taxes, very simple.  Anything we can do to reduce our income allows us to save on our taxes today.  Over the next ~30 years we will let this money grow tax deferred and look to implement tax saving strategies along the way.  Great articles about this are written by the Mad Fientist and Go Curry Cracker, you can always head over to irs.gov to read more, assuming you are a huge nerd or insane.  Our early retirement vision or strategy is very similar to Our Next Life with rental income and taxable income used primarily in FI and allowing our tax deferred investments to grow staying largely untouched.

*UPDATE:  The great thing about putting your investments on auto pilot is that it’s very hard to screw up.  The automatic withdrawals have come out of each paycheck like clock work.  

The only difference in this year compared to 2016 is the strategy was to max out our 401K a couple paychecks early, thus reaping the rewards of getting our money in sooner and also having a few extra dollars to spend around the holiday season.  This year we decided to take all of our bonus check money up front not allowing any 401k deductions.  We are still on track to max out all of our 401K and H.S.A. accounts, only my percentage needed to be increased a small amount to make this happen.

Max Out Mr. and Mrs. Even Steven Roth IRA for 2016 and 2017 contributions-One of the goals we failed to reach was our 2016 IRA contributions.  While we were able to contribute $2,900, we left $8,100 on the table…..or did we?  The IRS allows us to contribute until April 15 of the following tax year, allowing us the extra time to max out our 2016 IRA.  After this is completed we will make a focus to max out our 2017 Roth IRAs.

The thought process behind contributing to a Roth IRA next is essentially hedging our bets against the tax laws in 30 years.  This money will not be taxed over the next 30 years and when the time comes that we do want or need this money we are able to use access our Roth IRA without paying taxes.  If there is anything that I have learned from the vast amount of personal finance articles I have read over time is to stay flexible and have options.

*UPDATE:  Let me start with this monster sized tweet!

We completed our 2016 contributions before the 2017 tax deadline.  We have not yet contributed to our 2017 IRA so while I’d like to consider this goal half completed to me it’s really only like 25% completed since we still need to add $5,500 x 2 by the 2018 tax deadline.  I certainly think it will happen but it’s not specifically set up to automate and reach the goal.  We have money currently sitting in a Vanguard money market account that could be used for this goal, but like last year I believe we will wait as it comes closer to bonus and tax season to decide the specifics.

Eliminate PMI on our Chicago PropertyWe successfully paid off our Florida property in 2016, which is essential in our early retirement blueprint.

2017 real estate will once again be a major part of our financial plans.  As part of our original mortgage we obtained an FHA 203K loan and we were required to carry Private Mortgage Insurance or PMI for 5 years (unless we would refinance).  After 5 years, as long as we met the requirements from our mortgage company and state specific laws, PMI would be removed.  The purchase of our home was made in July of 2012, so for the next 7 months, our priority will be to reach the appropriate Loan to Value or LTV to eliminate PMI expense moving forward.

Since we paid off our FL rental home, we will have less of an expense and more income in 2017, all of which will be put towards eliminating PMI and reducing our mortgage payment.  I suppose the exception to this is Mrs. ESM is no longer contributing to the mortgage payment from her 9-5 job, this money is now being put towards savings.

*UPDATE:  So pretty interesting update on this one, assuming you like nerdy updates.  The plan at the beginning of the year was to take the additional rental income above any mortgage payments/FL Tax and Insurance/House Emergency Fund and make additional payments thus resulting in our mortgage reaching the 78% LTV required to remove the PMI.

The plan started as such but because of the plan changing with Real Estate getting Real, we actually decided to improve the property and floor in which we reside.  While the plan to cash flow any improvements would have been very close possible, the upfront payments to the contractor would not have.  We instead applied for and received a HELOC on our Chicago property.  The result is we took the needed amount from the HELOC and applied this to our mortgage resulting in eliminating our PMI payment.  Our first $0 PMI payment will begin with the August payment.

I’m not a fan of paying off debt with debt, however this eliminated a $200+ monthly payment that did not reduce principal and lowered our interest rate on the small amount that was moved over.  A 6 month introductory rate and a rate less than my current rate of 3.75% fixed on my mortgage (HELOC is variable rate, so that could change).

Build a Cash Reserve for a Down Payment on a House-I was hesitant to put an actual number with our cash reserve goal, however I learned my lesson last year by not having a measurable goal with our IRA and playing catch up this year as a reminder.  The number itself for the cash reserve is dependent on work, bonus, taxes, etc. and is a number that is not in our primary control.  I am holding off on details of the number since it is tied directly to work and a work bonus, I know I know the secret lives we live.  If we buy a house or  instead decide to have a large cash reserve moving forward I will be just as pleased to reach this goal.

Update:  There is not a sexy update for this part of the program.  The Vanguard funds sitting in a money market could potentially be the start of a down payment on a house, but it could just as likely go towards an IRA, brokerage account, or airstream (don’t get me started).  There is still a few moving parts of our “secret lives” we live, so stay tuned on that as we get closer to the end of the year.  I still know my number and my goal, I’ll certainly let you know if we reach it!  Also as I briefly mentioned, life is full of decisions, changes, and surprises.  One day we are talking about a big house and the next a small place by the beach, it’s really hard to say.

Build a Personal Taxable Investment Portfolio in the 5 FiguresIf there is one area where we are weak in our financial portfolio it would be our taxable stock investments.  While as a couple we have some money in a brokerage account it’s such a small part of our overall portfolio.  Personally, I have had individual investments in the past, the sale of these actually helped pay off my student loans.  My personal taxable investments stand at $0 at the end of 2016, I look forward to taking on this lofty personal goal.

As I previously mentioned our model or early retirement vision mirrors Our Next Life, just one of the reasons I like to read about their journey.  Here’s a picture they use that can help illustrate our plan as well.  Our early retirement is planned for 2020 at this time our income will be rental income and taxable accounts, this will be our dual income until I turn 60 in 2042, allowing our tax-deferred accounts to be utilized.

Update:  I was pretty pessimistic when I made this goal, my personal thoughts were to just be happy that I was starting a personal brokerage account that I planned to build over time.  Since my goal I have opened a new brokerage account with the company I work with and have even made a few trades, I’m currently over half way to my goal of 5 figures so that’s a big win for me and it just might be my favorite update so far.  

I have an automated amount transferred over every month and then quarterly I make a purchase.  It’s obviously a very small amount of investment, but it will grow just like our other investments(this is not the only brokerage account, as we also have a Vanguard not included in the 5 figure goal).  This money based on our blue print will be a small portion of our early retirement blueprint, so like a proud parent I am happy to have it as part of the family.  

Summary

Max out tax deferred accounts, eliminate PMI, create a large cash reserve, and go from $0 to 5 figures in my personal taxable accounts.  I suppose if I had just written that on Twitter, but since I like being long winded and sharing all the fun details I came to Even Steven Money.

Clearly life and the goals we create are more than just financial.  That’s why this year I will be sharing my personal goals and a small glimpse into what I find important as I pursue FI in 2017.  Thank you for reading and thank you for letting me share a little bit of my life with you.

Update:  Our goals for 2017 appear to be on track!  A couple twists and turns with the house and adding a little short term debt with the HELOC. Our taxable and tax deferred investments are on track and all savings goals are either hitting the mark or waiting on an event to occur later in the year.  I’m excited for today and for the future!!  Thanks again for reading and holding me accountable.

2 Responses to “2017 FINANCIAL GOALS Half Birthday Update

  • May the Financial Independence Unicorn ride with you on your Secret Journeys! You’re making great progress.

    • EvenStevenMoney
      6 days ago

      Thanks ZJ and to you, making great progress that is!

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