2015 has come to a close and with that, the end of another year of budgeting and saving. I have many proud financial moments for this past year. The main one is paying off my student loans. I had ten years to pay them back, but I was determined to be free from them as soon as I could. I budgeted and was able to pay them off in just 2.5 years.
What was your biggest financial accomplishment of 2015?
When it comes to 2016, I have a couple of main financial resolutions I hope to achieve. The first being to pay off the remainder of my car loan. I owe less than $5,000 remaining, so this should be an easy task. My next goal is to have a net worth of six figures before my 27th birthday (My birthday is in March, so this doesn’t leave me much time).
What are your financial resolutions for 2016?
Today and tomorrow are good times to sit back and reflect on what went well and what didn’t go well with your 2015 finances. You can then figure out what changes need to be made to create a wonderful 2016 financial year. It all starts with budgeting, so if you haven’t already downloaded an Excel sheet then do it now.
The other day I was sitting in a conference room with some coworkers. Our company was restructuring its retirement plan for employees. After the changes were announced, a general conversation started taking place. The financial recession of 2007 through 2009 came up. One employee joked how he lost over $3,000 in the market downturn. While it isn’t a large sum of money, it was enough of a loss for him to take his money out of stocks and place it in bonds. He has had it in bonds ever since.
It is often said that losing money is more painful than gaining or winning money. It is human nature for us to make rash decisions when our livelihood is being threatened. And yes losing retirement money does affect one’s future quality of life and thus his or her livelihood.
My fellow coworker got too emotional during a time when he shouldn’t have. When the market goes down, we hear “SELL, SELL, SELL”. And when it goes up, “BUY, BUY, BUY”. Don’t watch the news, don’t watch CNBC and their stock reports, and please don’t get emotional. Investing consistently over time is the best way to ensure that you invest during dips and spikes in the stock market. Right now the market is currently down about 6% from its all-time high. I consider that 6% a sort of holiday discount that we should all be benefiting from.
A new year is fast approaching. While many are finishing up their holiday shopping and setting their New Year’s Resolutions, now is also the best time to lay out your financial framework for 2016.
As is always the case with every new year, it is time to prepare a new budget. Getting your budget off to the right start is the best way to help your financial situation in the new year. Go to the Monthly Budget page on my website and download an Excel version for yourself.
Create your monthly budget for the new year, using your best guess estimates for various income and expense categories. Remember that it doesn’t have to be perfect, and you can always change it as the year goes on.
After you have set up your monthly budget, I highly suggest you check out Kimberly Palmer’s article that was shared on Yahoo Finance. I have provided the link below:
Look at some of the suggestions outlined and see where you can tailor your budget to focus on paying down high interest debt, or finding spare money to invest for your future. You might not be able to relate to or benefit from all 25, but find at least three that you can implement into your 2016 budget.
The other night I was pondering what actually classified as retirement. We all think of retirement as falling towards the end of one’s life. You work for a while, save up enough money, then use those savings to enjoy the latter part of your life.
But what if you don’t want to wait until you are 65 or older to retire? Say you want to save up money for 15 years, take 5 years off and then re-enter the workforce. Is this retirement?
I didn’t know the answer, so I did what everyone does nowadays to find such an answer. I Googled it. Webster’s Dictionary defines retirement as the following:
The act of ending your working or professional career; the period after you have permanently stopped your job or profession.
So if you did decide to take 5 years off during the middle of your working career I guess it would be classified as a hiatus. Regardless of when you decide to retire, there are a few things I believe retirement truly is.
When one’s passive income is greater than one’s expenses.
Your investments, rental properties, royalties or whatever revenue generating sources you have other than trading your time for money are greater than your expenses.
Finding ways to spend your time with people you love and doing the things you love.
You can have all the money in the world, but if you don’t have ways to enjoy it or enjoy your time then it has no purpose.
Creating your very own legacy.
Volunteering, raising money for a worthy cause, instilling wisdom in the minds of younger generations. Creating a legacy to be remembered by is the ultimate goal of success.