Last year, my husband and I were able to save and invest $85,300. This year, we set the goal even higher at $93,100. I must admit, it was a pretty ambitious target. But like the saying goes
Shoot for the moon, even if you miss, you’ll land among the stars”
I like setting stretch goals that are a little out of my comfort zone. They force me to level up and push harder than I ever would’ve without having them.
As the year began, I quickly realized that surpassing the previous year’s $85,300 accomplishment would be harder than I’d expected. We had some unanticipated expenses that forced us to reconsider our goals and adjust our budget.
Mid-Year Goals Check-in
So here’s where we are as of the end of May 2017:
My 401K Plan contributions
- Year-end goal: $17,500 ($13,000 of my contributions + 4,500 company match)
- Mid-year update: $10,781 ($7,688 my contribution + $3,093 company match)
- Status: On track to accomplish goal
Husband’s 403b & 457 plan contributions
- Year-end goal: $36,000 ($18,000 in each plan)
- Mid-year update: $16,462 ($8,231 in each plan)
- Status: On track to accomplish goal
The 401K, 403B & 457 Plan contributions are Non-Negotiable goals in our budget. Non-Negotiable goals are targets we are unwilling to deviate from unless there is a job loss or cut in income.
Backdoor Roth IRA
- Year-end goal: $11,000 ($5,500 each)
- Mid-year update: $11,000 ($5,500 each)
- Status: Goal Completed
We funded 2 backdoor ROTH IRA’s at the end of March that counted towards the 2016 Tax Year. It feels good to know that this goal has already been completed. We’re now able to focus our attention on our other goals. This is another Non-Negotiable goal in our budget.
Additional Mortgage Payments
- Year-end goal: $9,600
- Mid-year update: $4,000
- Status: On track
We pay an additional $800 a month towards the principal loan balance on our primary home. Paying off our mortgage early is very important to us, so it’s another Non-Negotiable goal in the budget. This additional payment is automatic and gets submitted with our monthly mortgage payment.
- Year-end goal: $15,000
- Mid-year update: $11,000
- Status: May not reach the year-end goal
While we seem well on track to hit this goal, I’m not sure that we’ll be able to invest the full $15,000 for the year. Unlike the retirement accounts contributions (401K, 403b and 457 plan) and additional mortgage contributions, this is NOT a Non-Negotiable goal. While it is important to save in non-retirement after-tax accounts, it falls further down the list of what’s a priority in our budget.
- Year-end goal: $4,000
- Mid-year update: $0
- Status: May not reach year-end goal
Although we finally funded the 529 accounts for our kids this year, it was with last year’s savings money. This year we planned to save $4,000 in the kids 529 accounts and we haven’t started saving anything yet. That doesn’t mean that we can’t or won’t try to contribute something to the accounts. Realistically, it’s just not a major priority for us right now. Our main focus is to save adequately for retirement and fund today’s expenses.
(Overall we have saved/invested $53,243 of the $93,100 target savings goal.)
The Unexpected Expenses
As mentioned earlier, there were some unexpected expenses that came up during this year that caused us to re-adjust our saving strategies. There were the following:
- Formula Costs- I stopped breastfeeding my youngest son at 9 months old and started buying formula. This was a couple hundred dollars a month in unanticipated expenses. I was able to avoid this cost with my first son as I breastfed him for 16 months, but not this time around.
- Catholic School- We decided to enroll our soon to be 3-year-old in Catholic School, another cost we were not expecting. If we choose to keep him in the Catholic school, this will be another ongoing annual expense.
- JourneyToLaunch- The startup costs for JourneyToLaunch have been relatively low thus far but I plan on investing more money going forward so that I can grow and scale the business.
Adjusting Other Goals and Scaling Back
To be able to hit our goals and pay for the unexpected expenses, we’ve decided to pause the following:
- Backyard Improvement Fund- We wanted to make some improvements to our backyard but the plans have been indefinitely put on hold. We know that it won’t be the best use of our money right now and want to make sure that we take our time in making long lasting changes.
- Vacations- While it would be nice to take a family vacation with the kids this summer, I’m not sure that it will be possible. Last year, my husband and I were able to travel hack and spend only $22 on our anniversary trip. If we can find a way to do that again this year, we will. Otherwise, a beach or fancy vacation is not in the summer plans.
- Car Replacement Fund- We’ve put off contributing to the Car Replacement Fund. Both our cars were recently purchased in 2015 and are paid off. We make sure our Car Maintenance Fund is adequately funded and stay on top of repairs so we don’t anticipate needing another car anytime soon. We thought that if we had another child, we would need a bigger car. But I’ve found a way to make my current Honda CRV work, regardless if we have another kid or not (Hint: slim car seats that fit 3 in the back row- which is less expensive than having to buy another car!).
Takeaways For You To Apply To Your Goals
If you’re looking for ways to prioritize your goals, adjust your habits and meet your savings goals, here are some takeaways for you:
- Select or rank your savings/investing goals from Non-Negotiable and Must Accomplish to Negotiable and Nice To Accomplish.
- Make your Non-Negotiable goals automatic and seamless as possible. You want to get rid of as many manual steps as possible in order to make these goals more attainable. Set up automatic transfers, contributions, and payments so you don’t have to think about it. In our case, contributions to our Non-Negotiable savings goals are either automatic or planned for in advance. Since the money in a 401k, 403b and 457 plan automatically come out of our check before taxes, we don’t even see or miss the money. This forces us to work with what’s left over to spend. My annual year-end bonus from work is already tagged to fund the Roth IRA’s. Our additional mortgage principal payments are also set up automatically.
- Re-evaluate your Negotiable/Nice To Have Goals. Can you put them on hold or adjust them in order to meet your Non-Negotiable goals?
- Split your expenses between Mandatory Expenses and Nice To Have Expenses. Plan to cut back or eliminate Nice To Have Expenses so that you can meet your Non-Negotiable savings goals.
While we may not fall too far behind our overall target goal this year, we’re prepared to be flexible and realistic with our budget and spending limitations. If you want to stay on track and reach your own goals, whether it’s paying off debt, saving or investing, it’s important to be pro-active and open to change.
Are you on track to meet your debt payoff, savings and investing goals for the year? Please share below.
EDIT: A reader sent me a private comment about showing the full side of my savings and investing number. Here is a snippet of it:
with only telling us one side it makes it difficult to judge how well you are really doing. Maybe you make $500k a year then you are only saving ~20% which isn’t as impressive as someone making $200k and saving $93k. Anyways just a comment I had cause that was something i was looking for on your site.”
After thinking it through some more, this reader (who I’ll keep anonymous) is totally right. While only showing you one side of the equation, it’s hard for you to see the true picture and gauge the full story. So here it is- our take home net pay after taxes and including retirement contributions is about $194,000. With a targeted savings and investing plan of $93,000 this year, that puts us at around savings rate of 48%. I share how to calculate your savings rate here.
Of the $101,000 we live on for the year; because we live in an HCOL area (NYC) and due to my long commute; our mortgage and commuting expenses (gas & tolls) account for almost 46% of our expenses.
Does seeing our take home pay put things more into perspective for you? Comment below or come on over and join the discussion in the Private Facebook Community.
Wow! This is fantastic. So you are only half way through the year and you have already saved double what “normal” folks will save for the whole year. So impressive, and inspiring. Sending you an email now about that 4-wk course! 😉
Thanks Char!! Saw your email and responded 🙂
Thanks for sharing. I like the idea of having non negotiable goals. I have a bunch of benchmarks I’d like to hit as well and sometimes it’s hard to decide where the money will go. I need to sit down and figure out my non negotiable goals and go from there.
No problem, I find that knowing the non-negotiables goals and ranking them help me decide what I need to focus on if things ever got tight
This is amazing!!!! I ❤ the mortgage non negotiable goal/deal awesome ❤
Do you have any student loan or “baby step 2” debt?
Hi Jarrett- I don’t have any student loan debt. Only mortgage debt.
Giving the full picture sure does help alot. As a single mother making only a quarter of your combined income and student loan debt at around half your income, I don’t feel as bad at the little bit that I can save. I am working on my debt right now so my income is null and void. Thanks for the transparency.
Thanks for the feedback, yes you can only do what’s reasonable based on your income. Good luck to you on knocking those student loan debts out!