Wednesday, April 8, 2009

Looking at the Future and Possible FInancial Goals for 2010

I love reading personal finance blogs. Once and awhile I read an article that really catches my attention and when I do, I like to throw them in a bookmark folder to go back and read again later. Here's one from back in October I really liked: 10 Things That Will Happen On the Road Between Being in Debt and Being Debt Free by No Credit Needed. I think the author lays things out pretty well!

I have such a weird situation, I mean, in many ways I'm not really "in debt" as it is usually defined. Oh, I have a touch of consumer debt, but it will all be paid off in just a couple of months. Besides, it wasn't like I was out buying crazy things - my credit card debt was accumulated through my divorce. Let me tell you, divorces are expensive. Even if your divorce is fairly amicable, as mine was, there are still a fair number of unexpected expenses that can crop up. For me, a lot of that went on the old credit card. The good news is that it is almost a year later and that will all be paid off. However, while my consumer debt is almost gone, my mortgage debt is through the roof...

Remember when real estate was considered one of the few true solid investments? No matter what happened, "real estate would always increase in value." Ha! Still, no use crying over spilled milk or underwater houses. Instead I've been thinking a bit on my financial goals for the future. For right now I have a couple of months to get the consumer debt paid off, plus I am working on paying for getting the house painted. That will keep me working on that $900 monthly goal through the summer. ...but then what? I have a few more home improvement projects, both at home and at the cabin, and I would like to go back to school, but I am also starting to think about that mortgage debt.

There are a number or arguments on why (or why not) to pay off your mortgage and I've read the pros and cons on each. What I am thinking about though, is tackling just one loan. See, each property was financed with two loans in an 80/20 split. That means I have 4 loans total. One of those has a slightly higher interest rate than the others and not as good of terms. It's also one of the smaller "20" loans. Even though we are only 4 month into 2009, I am already thinking about 2010 and I'm kicking around the idea that once I get what needs to be done taken care of this year, I next start to tackle some new projects, namely: 1.) Get the emergency fund up to 3-6 months of savings and 2.) Pay off that smaller mortgage.

Now who knows what the future will bring? Right now this is only an idea I am toying with. I realize that even if I were to jump into these with both feet, it will take me a couple years to achieve them. However, awhile back I wrote about how not having financial security saps away at my happiness. I was feeling pretty low when I wrote that piece, and I am not sure I would say the same today. Fortunately, I don't feel quite so much like I am walking a tightrope as I did then. I feel like I do have some security, even if it is only of the "Well, I ain't died yet" variety. I have happiness. At the same time though, I wrote some good solid goals in that article on what it would take to make me feel more financially secure. Those are still valid and worth fighting for. Tackling the emergency fund is a given, I think. Already I feel better knowing I have 1 month stocked away, having 6 months would be incredible. If along with that, I could chip away at some of that mortgage debt, well, that would be fantastic.

Photo of underwater houses by: bk-robat


Simplelivin' said...

It's great to think ahead and have longer term goals. It helps to give you motivation to push for them. Good luck with whatever you decide!

Catie said...

The reasons I have heard for not trying to pay off the mortgage early generally involve not having retirement or an emergency fund. As in, do those first. But since you have both of those, I think it's a great idea to start taking down your mortgage. You can still be contributing to the other stuff, but you need to beat your mortgage into submission. Until you can comfortably afford it, it's a problem.

I also highly recommend starting a fund for your next car. I know you're keeping this one for a long time, but having $3000 to plunk down on my new car made a huge difference on my stress level. I didn't worry so much about my car conking out on me.

And I do believe, with time, your values will go back up. You are in a great house in a great area.

I liked that blog you linked to but I think there is a step mising: step 1.5 resist the fierce temptation to blow a bunch of money because you are so giddy about being debt free!

Miss M said...

My house is so underwater that I can't wrap my mind around paying it off. It feels like throwing more money away, money that I'd rather save and invest. If you look at the hosue I'm deeply in debt, but push it out of your mind and I'm not doing too badly. For now I'm just forgetting what a mess my housing situation is, it's too depressing. That is partly why my net worth doesn't include the house, it just drags me down. Sorry that you're underwater too, I didn't know.

Saver Queen said...

I read an interesting article in a magazine today that reminded readers to calculate in non-tangible and tangible assets when calculating their network - for example, a good job, or happiness. I thought that was a neat idea.

Dawn said...

Simplelivin' - Thanks! If I don't have goals I start falling into a rut. Even if I change the destination, I need to keep on moving!

Catie - The other concern is being able to write of mortgage interest on taxes, but I have a feeling I will still have plenty to write off!

A car fund is a good idea. I plan on keeping mine for at least another 5 years, but having some money set aside for the next one would be a really good thing.

Ha! I liked your step 1.5! So true!! Not that I am out of debt yet, but I can see the temptation!

Miss M - Yeah, I am. But as Catie mentioned, I am in a great neighborhood. It will come back around, it just may take longer than I originally thought. Since I don't have it on the market right now anyway, I just try not to think about it too much.

Saver Queen - What a nice thought! I like that idea. Out lives are certainly worth a lot more than just how much money we have (or don't have.)