Wednesday, February 15, 2017

Budgeting 101 : Sass Family Money Goals

I talked last week about how Mr. Sass & I are diving in to the world of joint finances, and while we're not officially joined yet, we know we will be soon and it's important to us to have a plan, a budget, and a set of goals.

Some of these goals are long term - with a completion date set to align with retirement, others, we've broken down to be more short term.


Make a budget | Self explanitory here, we want to lay out reasonable money expectations for the 2nd half of 2017, and our first 7 months as a married couple. We figure those first 7 months will be a test run of sorts and we can follow it up by tweaking out 2018 budget. I'll be following up with another Cash Confessional once we're officially married.

Pay off the house (in 24 months) | The house we're living in now is small. And it's not the house we hope to raise a family in someday. It's just fine for now though. Since it's literally the only debt that exists between the two of us we want to focus on paying it off. We're not sure if it's something we'd want to keep as a rental or sell off and enjoy not having to use the sale money to pay off the loan, but either way, we plan to pay it off - and quickly. I'll talk more about this if anyone is interested - is anyone interested? But, we plan to devote one whole salary for two years to accomplish this. We have to toss the numbers into our official budget spreadsheet, but we're 99% sure this will be NBD.

Save one salary for a new house | While we plan to spend 24 months & one whole salary paying off the current house, realistically we think we'll be moving within 5 years. After this house is paid, we want to keep saving hardcore for the down payment on our Forever Home.Our unofficial plan is to start looking at houses this summer, and planning to strike if anything that meets most of the checklist comes up, regardless of if that's in 2 years or 5 years. But, considering we want land, a big kitchen, front porch, room to build an additional work shed // garage, attached 2 car garage, nice flat backyard and all within a small specific area that's not far from where we are now, and all for a fair price, I'm not concerned we'll accidentally stumble upon our dream house soon (or ever).

Reach $1M net worth | There's literally no reason for this goal, other than it means we're making progress towards retirement. And it sounds cool as hell to be worth a million dollars. Even if you take all our cash, retirement savings, stock market funds and the value of the house, we're a ways off. But I have a feeling this will snowball quickly if we keep plugging away at it.

Save $3M for retirement | Have you heard of the 4% rule? It's the thought that you're safe to pull 4% of your nest egg each year, and that it will continue to sustain you as it will be growing at a rate higher than 4% each year - and growing enough to sustain inflation also. So, by that rule of thumb, $3M would give the Sass family $120K each year to live off of in retirement. Which, right now sounds exorbitant. It's way more than we spend right now. I'm not even sure what we would do with it all. While this number is half researched & half pulled out of our asses, we want to be cognizant that $120K may not buy nearly as much in 30 years or 50 years as it does now, and that we don't want to be restricted when it comes to travel budgets. So, $3M is the goal, and I have a feeling this is a goal we'll come back to and tweak as needed over the years.

What are some of your money goals?

Linking with Amanda.

20 comments:

  1. I love this stuff! And yes, I'm interested about the house stuff! I'm excited for this series :)

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    1. You got it - we scribbled all the numbers down on a napkin the other night. #NerdStatus

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  2. $1M net worth totally doable. I've been plugging away at my investments since 15yrs old and back then it wasn't much ($25/month). over the years as i began to increase my salary, i slowly increased my contributions so now i'm at a projection of having a net worth of over $1M by the time i retire so it's years in the making...keep at it! always pay yourself first before anything/anyone else!

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    1. It's crazy - 1M will take us quite some time, but after that the path to 2M or $3M isn't that far behind!

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  3. Its so good you two are going into marriage with money goals. That is so good because money is such a cause arguments.
    I just want to save up to pay cash for my next car... but after only 2 months of no car payments, of COURSE my car breaks down. GEEZ... the hubs is trying to get me to go ahead & get a new car but I just want to save. SO now I dont know what to do. Get a cheap used one until I save up? Why cant money grow on trees?

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    1. Oh no! Mr. Sass forever goes the used route. Not a junker persay, but his "new car" right now is a 2012 Ford with 75K miles on it. He had a price range in mind that he could pay with cash and then shopped around for his best option. I personally prefer a new car, but cars are also a lot less expensive than an SUV or truck. So we come out spending about the same. Hope you figure out the best option!

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  4. I wish I had been better about saving earlier in life. It wasn't until I got my big girl job 4 years ago that I got a 401K and started getting my act together with savings, so I'm tragically behind but hey, better late than never I guess.

    My biggest money goal is to be debt-free. We want to buy a house though, so I guess I should say, debt free except for a mortgage. I don't use credit cards much but student loan debt is going to take forever to pay off, so it's a looooooong term goal. On the plus side, having all these lines of credit open has given me a good credit score, so there's that!

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    1. Debt free is a great goal - but even if that's a ways off, saving and spending consciously so you're on a path to debt free is the next best thing. I see friends with piles of student loan debt making dumb decisions thinking they'll be in debt forever, when all that does is create NEW debt and now they really will be stuck with this forever.

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  5. This is fantastic! Having financial goals is for sure a very important priority!

    Right now, my number #1 financial goal is to pay off my credit card. I have a budget and a timeline. I used to be scared of my finances, but I wasn't afraid of spending money. Now I know that the only one affected by this is me.

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    1. YES! That's the way to do it. And you're right. Unfortunately it doesn't affect anyone but you, both good, and bad. Can make it harder to stay on track, but sounds like you're there.

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  6. I love these goals; I love that you want to pay off your house; my dad wanted to be debt free by the time he was 30, and I think it was the day before he was 29 that it happened? :)

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    1. That's such a great goal! And I would love that for myself - with the plan we're starting on it'll happen!

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  7. You are so smart to be thinking of this now. I too worry that what we think is "suitable" now for retirement may not even be enough in 30 years or so!

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    1. We're definitely worried about that - but don't really know how to decide what a good # for retirement is. We ran the numbers between now & our retirement age from the past to determine inflation and then applied that to what we hope to have to spend each year in retirement, but who knows if that will work.

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  8. You are going about this in EXACTLY the right way. We try to stay responsible and on top of things, but as you saw in my last post, change happens. We'll have to save a bit more for Charlie's new equipment and our NEW car just broke down. The good thing is that if you plan ahead, these surprises don't feel like disaster...just another part of life. : )

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    1. That's the underlying goal, is that if we plan ahead these things that pop up are just life, not something that will bring us down in flames.

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  9. Sooo, I have to admit that I am TOTALLY jealous that you could pay off any house in two years... because in Sydney, I couldn't even pay off 1 square metre of house in two years ;) Hahahaha.

    I love that you have a goal of reaching $1M net worth! You don't muck around with your goals!

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    1. Oh man, that would be soul crushing number wise to see. Pittsburgh area seems to be fairly reasonable price wise, at least for now, and the house is a 2bed // 1 bath, so not tons of SQ FT.

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  10. You guys have some great goals, for sure.

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