Saturday, December 31, 2005

New Year's Financial Resolutions - RS

2006 is almost upon is, so the Young Professionals are going to make a few resolutions for the new year.

My wife and I have no credit card debt and both of our cars are paid off, so we have no resolutions to get out of debt from those. We do both have student loans and we have a mortgage from our new house (we moved in June 2005), but those rates are low enough that it isn't killing us (read more on these here), so we will not have any resolutions for those. So without further ado, here are our 2006 financial resolutions.

2006 New Year's Financial Resolutions for RS and Mrs. RS:
  1. Create a Budget
    My first resolution for 2006 is that I am going to be more careful with my money. My wife and I have never really held ourselves to a budget or tracked our spending at all, but this year we are going to start. As I mentioned in the post about the Number of Affluent Households Soaring in 2005, the more money that you have, the more you spend. We just need to figure out what we are spending it on in our household. To help with this resolution, I have put Quicken Premier 2006 on my Christmas list.

  2. Take Better Care of our 401(k)s
    My second resolution for 2006 is that I am going to have to rebalance our 401(k)s. I have never done this in my 8 years at work. I have changed where my future contributions get put, but then a certain percentage of my existing money is not correctly allocated. I need to change that and fix the allocations for both mine and my wifes' accounts.

    The worst part of my allocation is the company stock that I started out buying when I first started work. About 10% of my money is stuck in there and it is down 15% overall. I haven't been putting money in there for years, but I would like to see it go up a little before I get out of it. Maybe I should get out of that mindset and just dump it?

    I will also lump in the need to raise our 401(k) contribution percentage. We are both currently only paying 6%, enough to get our companies match. At a minimum, we will raise this to 10%, but hopefully be able to move to the full 15%.

  3. Save More
    My wife and I have a current plan in place to save $400 each per month for a total of $800 that will be added to our Vanguard account each month and invested in index funds. We would also like to save some amount of money to go towards our Roth IRAs at the end of the year (but invested monthly to do some dollar cost averaging...see some great arguments on this here).

  4. Close our Escrow Account
    We currently have our taxes paid monthly into an escrow account held by our mortgage company. My plan is to stop that (eventually since they require me to actually write a letter and send it snail-mail to stop the escrow), save the money ourselves monthly into a money-market account (or similar short-term investment vehicle), and then just pay the taxes ourselves when we get the bill. This allows us to gain interest on the money rather than our mortgage company. The problem may be that they will either not let us stop the escrow or that they will charge us to stop it, I will have to talk to them more about it.

  5. Get Rid of our Losers
    I have mentioned this before in my Take the Profits and Run post, but it is something that I have to do. The problem is, I have a real psychological problem getting rid of losing stocks. I always feel like I should just keep the stocks until they at least get above what I bought them for. This is one that I am going to need a lot of help achieving...

  6. Read More Financial Books, Magazines, and Internet Sites
    Mrs. RS just finished The Automatic Millionaire and I am starting to read it now that she is done, but I would like to start visiting the library more and reading up on more financial books (the library so that I don't have to spend more money to read books on how to save money). I also have subscriptions to both Money magazine and Kiplingers, I just have to find the time to fully read them both. The last part of this one...well, it may not be possible for me to read more internet sites about finances than I already do.

  7. Make Mrs. RS' Business Successful
    We are going to do our very best to make her new side business work. We aren't sure exactly what this will involve, but I know she is working hard on it and I will help in any way possible.

  8. Create an Encrypted USB Drive for Personal Information
    Scott Hanselman from Computer Zen had a post about his 2006 Resolutions and he had a great idea about creating a USB thumbdrive that contains all of your important personal information. I bought a SanDisk Cruzer Micro 512Mb a couple of months ago and I have barely anything on it yet. Now I know exactly what I need to fill it with. The following excerpt from the NYTimes is what I really need to do:
    SCAN: Some important documents are on paper and you will want copies of them with you: tax returns for the last three years (Form 1040 is all you will need in an emergency), a recent pay stub, birth certificates, marriage license, the deed to your home and insurance policy pages that list your coverage. If you do not have a scanner or a printer with a flat scanner, take the pile of documents down to a copy center like Kinko's to scan. Record the image files on the U.S.B. drive.
    I also followed Scott's suggestions for a password manager and encryption program. I set both of them up tonight and am very happy with them so far.

  9. Insurance and Wills
    This is just one that we need to look into a little bit more. I am not sure if we need a will yet, since we don't have kids yet. I don't know much about insurance (except that we have a little through work), so I don't exactly know what we would need, if anything.

There you have them, my 2006 New Year's Financial Resolutions. Hopefully they can not only help me, but some of you too.


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