Our financial goals have mainly centered around one simple concept, “let’s stop spending all our money every month”, and John and I have talked long and hard about what we want to do with our cash, where we’ll put it, and what it will do for us in the future. We have never set up a fully-fledged plan, but we have had some general ideas about which direction we’re heading in, and which milestones we will pass on the way to our destination, and which ones we’ve already passed.
1. Live on one income – done!
This one was pretty much put into effect from day one, since we started out with only John’s income anyway, but when I got my job I found my money trickling away on ‘things’ – new phones, paying a bill here and there, fixing the old car, and putting a lump sum towards debt repayments.
2. Create an emergency fund – done!
Putting 100% of our leftover money towards debt is all well and good, but if our bank balances are at zero, and there’s an unforeseen emergency, we’d have to use our credit card anyway, and the debt would be piled right back on again. So the big payment would be cancelled out. So now that Christmas is gone, the car isn’t in imminent danger of breaking down, and we’re actually living on one income, my money has no place to go but up. And we hit one of our emergency fund goals of $1,000 sometime January. Now, whenever I make a payment towards debt, I’ll pay out just enough to stay above $1,000, thus keeping the buffer around, and making more of a real contribution towards getting our debt eliminated. This buffer should also hit the $2k mark sometime in March, even after repayments have come out.
3. Pay off all debt – in progress
Some money websites put this as number 1, but like I said, you really do need both a budget and emergency fund in place to reduce/eliminate your reliance on credit cards before you can really tackle the symptoms of their use (the main symptom being credit card debt). John and I have already aggressively paid off one $2,700 card before the interest-free period expired, and now we’re only a couple of months away from paying off the $3,100 credit card (@10% interest), and then we’ll tackle the personal loan, which was for $4,000 and now has about $2,100 left on it. We’ll decide how to take on the student debt later, since it’s pretty much interest free (the small amount of interest we pay on it, less than $90 a year, is a tax write-off anyway).
4. The baby thing – fingers crossed!
According to our plans, our debt will be gone before a baby arrives (especially since I’m not even pregnant yet), which will mean we’ll have extra cash lying around each month that used to go towards debts, and will now help go towards the baby, which is a huge relief. Our emergency buffer will be in good shape (though I have no idea how much medical expenses we’ll incur – we have to give the insurance company a call and get a list of what exactly will and won’t cost money). I am planning to work as much as possible until I’m visibly pregnant, then I will cut back to ‘real’ part time hours. I don’t think I can give up work entirely after I have a baby, but even something like one day a week would provide a slow trickle of income, keep my foot in the door at my current workplace and keep my resume from having holes in it.
5. Down-payment – nowhere near
So we’re nowhere near even starting to save for a down-payment on a house – yet. But we have everything in place to make it happen. We probably don’t need more than $2k for our emergency fund (our highest insurance deductible is like $500 I think? Or 30% of certain medical treatments – s0 unless several truly awful things happen at once, we’re probably okay for now). So anything after $2k could be counted as the beginnings of a down-payment, but it might take a year or two after that for it to be where it needs to be.
6. Vacation – ???
Who really knows about this one. It’s one of those things in the back of my head, where I think ‘oh we’ll probably get around to it some day’, and John and I often plan vacations when we talk about our future – Visiting England, road trips, camping trips, going to Chicago or New York, Disney World, etc. – but who knows if we’ll ever have that much extra cash lying around! And it’s not exactly a priority right now, what with other, much more exciting, things on the horizon…
Though a weekend away doesn’t sound so horrible after a hard work week.
Anyway, that’s our financial roadmap as it’s looking right now, as a married couple on their way to having a house, a baby, and a secure financial future. If all goes to plan. Fingers crossed.