My FinancialGoals
It is important to write your goals down and keep track of how the progress is coming along. This page will serve to track my financial goals and their progress. If you have any suggestions or would like any additional information, please feel free to write me an e-mail at david113@gmail.com.
1) My long term plan for my 401K involves the following steps.
1. Have the December dividends each year exceed the monthly contributions I’m making from my paycheck.
2. Have the December dividends in each investment exceed one week’s income.
3. Have the December dividends in each investment exceed one month’s income.
4. Have the December dividends in each investment exceed one year’s income.
Why December? The biggest dividend payments happen at the end of the year as companies are restructuring and getting ready for the new fiscal year.
Big goals. Long time horizon. Good thing I’m starting early. 
I’m almost complete with stage 1. (2)
2) Save Money Using Balance Transfer Arbitrage - Last update March 2008
1) I transfered over the remaining balance from my 1.9% transfer in 2007.
2) I transfered the remaining debt to a Chase card. There were no balance transfer costs and the card will be charging me 0% until March of 2009.
3) This frees up my cashflow. Rather than have interest charged on my debt, I have chosen to minimize the cost of my debt while I focus on buying higher yeilding ASSETS!
Primary issues : Miss a payment, the APR shoots up to 20%+, don’t pay off or transfer out by March of 2009, the APR shoots up to 20%.
Solution that resolves all issues : Enroll in automatic payment plan. Add Chase account to list of bank accounts to check on a monthly basis for payments. Add Chase account to budget. Add amount of money saved on interest payments to automatic savings deduction accounts which are used to hold funds until the accounts reach levels of $1,000 where they are then used to purchase dividend paying company stock. SFL, Altria, GGP.
Time cost of program : 5 minutes to find the APR on google and through spam credit card offers. (If you read through a few junk mails…you know exactaly what to look for in an application. Less than 5% APR for at least 12 months, high credit limit, less than $150 or 2%balance transfer fee)
5 Minutes to make a call to the bank to affirm application.
5 minutes to add/update Excel budget (actually done while on the phone with bank)
10 minutes, to check on all transfers online and cofirm payments/update budget.
10 minutes, to increase balance limit to keep FICO aboove 760
2 min/mth to confim payment schedules/update budget
5 min When transfer is terminated retransfer money and update budget.
IT TOOK MUCH LONGER TO TYPE THIS OUT THAN TO ACTUALLY DO IT! With a couple quick 5 min tasks, you can really use things like this to improve your cash flow and build up your assets!!!!!
Primary benefit(s) : This maneuver took me less than an hour to complete and kept my cash flow up so I could buy SFL. I now receive $175/quarter as a dividend payment.
Secondary benefit(s) : Use the system to work for me instead of against me. Keep your actions proactive instead of reactive. Increase FICO. Increases credit base another 20K for ‘just in case’ purposes involving future investments. Get the best bank offerings, free investment magazines, bargaining power with your banks because you can always take your business elsewhere. A sense of purpose and involvement with your finances that keeps you on point with minimal effort.
Notes regarding this project :
3) Have 401K Funds in Excess of One Million Dollars - Added July 2007
a) 401K funds = $10,000 (Status: Complete)
b) 401K funds = $50,000 (Status: Incomplete - Expected date of completion : early 2010, age 28)
c) 401K funds = $100,000 (Status: Incomplete - Expected date of completion : 2013 age 30)
d) 401K funds = $250,000 (Status: Incomplete - Expected date of completion : 2017 age 35)
e) 401K funds = $500,000 (Status: Incomplete - Expected date of completion : 2023 age 40)
f) 401K funds = $750,000 (Status: Incomplete - Expected date of completion : 2026,age 44 )
g) 401K funds = $1,000,000 (Status: Incomplete - Expected date of completion : 2029, age 47)
Assumptions:
-This does not account for changes in salary
-Assumes continued 22% contribution of salary
-Assumes 11% market return
4) Max Out My ROTH IRA Contributions Every Year- Added July 2007
A ROTH IRA is the most powerful retirement vehicle out there. A 401K has the positive of often providing a company match but you’ll still get taxed on those distributions. Since a ROTH is funded with after tax dollars, as long as you aren’t making withdrawals until you are retired, all distributions will be 100% tax free. The funds in a ROTH IRA compound in a 100% tax free environment. I’ve been contributing to a ROTH since I was 15 and will plan on doing so as long as I meet the eligiblity requirements.
2007: Full $4,000 contribution made.
Update 07/20/07 : ROTH IRA contribution limits are set to increase to $5,000 in 2008. Remember that you can make your 2007 ROTH contributions until April 15th 2008.
2010: Will transfer funds from a taxable account into ROTH
Other goals :
1) Have my Prosper.com account reach critical mass to serve as an emergency fund providing returns that exceed other fixed income rates and provides $1,000/mth in passive income. - June 18th
A) I started investing in Prosper in October 2006. I funded it by directing my emergency fund contributions into the site to make loans that passed my entry criteria. In March 2007, I reached account levels that were self sustaining and provide ~$50 in weekly repayments which allow me to make a new loan every month.
B) As of October 2007 (One year into Prosper investing), I am now recieving ~$100/mth in interest income. I am now 10% towards my goal of $1,000 in passive income each month.
C) I have chosen to continue to reinvest all repayments that I recieve but am not adding funds to my account at prior levels so that I can focus on strengthening my cash emergency funds.
Completed goals :
2) Save Money Using Balance Transfer Arbitrage - Last update March 2008
Initial goal:
1) I transfered ~$5,000 from a card charging me an APR of 10% to another card which will charge me 1.99%. I paid an upfront fee of $150.
2) The savings on interest payments will be ~$33.38/mth ($5,000 * 0.67%)
Note: 0.67% is 8.01 (the difference between 10% and 1.99%) divided by 12. (months in a year)
3) The balance transfer offer is good from June 19th, 2007 - February 2008. (Eight months) I will break even after ~four and a half months. (October 2007)
4) Total savings from this transfer will equal ~$120. I will put $30/mth into another account starting in October 2007.
5) In February 2008, I will either pay off the balance or transfer the balance to another card using an introductory balance transfer offer.
Update 10/22/07 : The balance transfer payments are going along well; minimum payments are $143/mth and I have been making payments of $150/mth. ~3 months of the balance transfer period remain.
Update 03/14/08 : The balance transfer was a total success! The remaining funds were transfered over to my Chase card. There was NO balance transfer fee and it offers a 15 mth APR of 0%. I don’t know about you guys, but I’ll take a 15 month 0% loan anyday! (This expires in March of 2009)
