Goals!

Ok!  I did it!  I made some goals!

It actually took me a couple of hours (and I still don't feel quite finished) but it was a super-good experience. Almost like therapy. I really got down to thinking what I want my life to be like now and in the future and started writing it all down. They weren't all financial goals, but the majority were, which is part of the reason why my goal-setting probably feels "unfinished"--there's more to life than just money! So, I'll keep working on those goals, but since this is my financial blog, I'll fill you in on the relevant ones.

The Vision:

I want to become financially secure by paying off ALL my debts as soon as possible, 

living comfortably within my means, saving a regular percent of my income, 

investing some, and donating some. 

By now you've caught on that I'm religious, so paying tithing (10% of my income) to my church is important to me. Something else my church does is called Fast Offerings.  It's where we fast for two meals (usually for 24 hours) and we donate the money we would have spent on food to the poor.  Most offerings stay local and help needy families in the areas the money was gathered in. In the past, I've been the recipient of some of these funds, so I feel very strongly about contributing to this.  I had always contributed offerings before, so I view this with a sense of karma. I donated when I could to needy families, so one day, when I was the needy one, there was some money to help me out too. Now, I hope I can just continue to contribute but never have to need any myself again. I'd be totally cool with that.  

So tithing and offerings always come first, no matter what. That's the number one goal. What I do with the money after that depends on what my financial status is. I've made several goals for where I want to be in different stages of my life. In goal-setting, you should always start with the end result you want to accomplish and structure your goals to meet that end, so that's why I started with my vision statement up above.

So I started typing out all of my goals for this post, but it was getting a little long, and I wasn't really sure exactly how interesting all my own goals would be to my readers. I had them all listed by length of time: goals to reach within one year, three to five years, 5-15 years and 15+. I realized that a lot of them fall into different categories, so I'll just share the gist of my goals.

The first category is debts. My short-term goals involved paying off my credit card, with longer-term goals involving all my students loans and eventual mortgage.  I want to pay them off as soon as possible.

Another theme of mine is saving and investing. My goal is to get an emergency fund up ($500 for now, $1,000 by this time next year) and a small cushion of savings before using extra money to obliterate remaining debts. After credit cards and loans are taken care of, then I'll build up my savings and start contributing to my Roth IRA again. When I get a little saved up, I'm going to hire a financial adviser (wealthy, with little or no debt) and start diversifying my portfolio.



Another area is my children's financial education. I plan on teaching them how to handle money at a young age and provide opportunities for them to get a handle on their own finances by the time they leave home. I also want to start savings funds for them for things like college, missions, or marriage.


The last area (not least) is in charitable contributions. I will keep paying tithes and offerings, but once I get more stable I want to donate to other worthy causes like education, women's rights, health, etc. My church has a program called the Perpetual Education Fund which provides interest-free loans for people who can't afford school, mostly in third-world countries. They pay the loan back when they can, and so far, most people have paid it back. I also like kiva.org (check it out!) that allows people to help fund beginning entrepreneurs all over the world. I've already donated $50 ($25 was re-donated after it was paid back), so I think I'll definitely keep that going.

What are your goals? Remember to think them through and organize them by time and don't forget measurability. Get them typed-up or written down, and put somewhere that you can review them often! Best of luck to me and you!

Definition of Wealthy

So this post is supposed to be on goals, but I'm not ready yet.  But have something else to talk about.  So I like to read books about finances becaue they give me new ideas, help me to stretch out my mind, and just plain motivate me.  So now I'm re-reading The Millionaire Next Door. It's based on studies of people who have a net worth of $1 million or more, but there is also a more flexible definition of "wealthy" based on your current income.  So they have this neat little formula for what your net worth should be:

Age x Annual Income (pretax, but not including inheritances) /10

So, I decided to plug in my numbers just for fun.  I'm 26 and this year, my total earned income will be a whopping $600.  So,

26 x 600 / 10 = $1,560

Amazing, huh?  A net worth of a mere $1,560 would make me "wealthy" based on $600 a year.  What was my net worth again?  Oh yeah. -20 grand. This would make me what the book calls an under accumulator of wealth.

It's kind of an interesting formula.  Interesting because age is used when you do not work your whole life.  So it's only counting your total earnings for a tenth of your age, but when you are older your working years are a much larger percent of your entire life than when you are younger.  I got my first job at 16, and I've pretty much been working in some regard or another (I spent 18 months volunteering as a missionary for my church so no bucks there) since then, so I calculate my earning-money working life to be about 34% of my entire life so far.  I think the highest I've made in a year was almost $20,000 and the lowest, well, except for the missionary work, it would have to be my current rate.  But let's fast-forward to when I'm say 50.  Then my working life would be 66% of my entire life.

At any rate, the formula seems to work out ok anyway, and it's fun to give it a try.  What happens when YOU plug the numbers in?  Are you wealthy?

The Truth

Ok, so this is the "bare all" part.  In order to fix the state of my finances, I have to first understand the state I'm in. Well, I kinda already know it's bad, but I mean, crunch-the-numbers, stare-reality-in-the-face kind of action here.  

So here it goes:


ASSETS: 

Current cash........................45.17
Roth IRA fund...................2,581.73

Total:............................2,626.90





LIABILITIES:

Student Loans: 

UHEAA..........................8,752.64 

Nelnet.........................12,678.21 

Family...........................1,214.10

Credit Card.......................358.72

Total Debt....................-23,003.67

Total NET WORTH...........-20,376.77

Yikes.

So there's the ugly truth of it all.

So the question you're all asking right now is probably "So what are you going to do about it?"  And I think that's a fantastic question.  I shall let you know when I figure it out myself. See my next post on goals! 

Hello! And Welcome to Fiscally [Ir]Responsible!

Ok, so I've decided to bare all to get myself out of the financial rut I'm in.  I have way too much student loan debt, some credit card debt, no assets whatsoever, and pretty much no income.  I grew up poor, and I'm doing a good job keeping up the status quo.  

The thing is, I'm kinda tired of the status quo.  I wanna be RICH.  And by that I mean stably wealthy: more assets than liabilities, debt-free, able to pay the bills and then some, enough savings to get through any crises, sufficient retirement savings, and a good investment portfolio.  I have to be honest though. Even phrases like "good investment portfolio" sound like a foreign language on my tongue.

With that, let me introduce myself.  This is me:

and I'm a college student here:

...in Hawaii.

Now before you get all judgmental and say, "You live in Hawaii?  I'm not going to feel ONE BIT sorry for you and your financial situation!" just hold on a sec and give me a chance to 'splain, ok?

First off, I'm not living the high life, ok?  According to savingforcollege.com  average tuition for four years at a public institution as of 2010 was $33,300 ($119,400 for private) for just tuition and fees.  This number does NOT include things like room and board, books, food or personal and transportation expenses.  My total tuition costs for four years at the current tuition rate is only $18,520.  And it's a private school.  And I'm only attending for three years! (But before you get impressed that I'm getting my degree after only 3 years, I should confess that I already came with an Associate's degree from a community college, so technically it's 5 years.  Also, I'm 26.)

Secondly, I'm also working.  I'm not the take 20-credits and work two jobs full-time type, so I work part time as a Resident Assistant at a dormitory (called a "hale" /ha-leh/ from the Hawaiian word for "house") AND it's one of the best jobs on campus financially-speaking because I save more from free rent and meals at the cafeteria than I would earn from a regular on-campus wage-paying job.  So I should get smart points for that, right? 

Thirdly, I'm here because I really like this school and what it stands for, and I love the program here for my major.  You'll probably hear more about these things in later posts.  

So I hope you enjoy my blog and can learn from it.  I'll be posting more and adding new features as I can, like book reviews of financial books, entrepreneur spotlights (especially from college.)  Feel free to comment and give ideas/feedback for post ideas or my financial decisions.