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My New Year’s Resolutions

It’s that time of year again. As the year crosses over to a new one, society historically dictates you make a resolution. These New Year’s Resolutions are a commitment to help you improve your life into the next year. I recently learned that there is a movement against the idea of New Year’s Resolutions. Honestly, I view their usefulness as one of execution, not concept.

The problem with these resolutions is all too often we don’t follow through. Or worse, you only take one time of year to consider where you are, and where you’re going. We have a concept in management at the company I work at called going to the balcony. The idea is if you only work during the day to day situation, then you won’t be able to move forward strategy. You won’t see the forest for the trees, and thus will be stuck. Instead you need to take a step back and look beyond today to figure out the direction for the organization. New Year’s Resolutions are an example of that principle when executed correctly. They are a good reminder once a year if you have slacked off on keeping an eye on the big picture.

I wrote previously about using goals and investment planning to ensure we follow through, so I won’t retread old posts here. No, this post is about my goals for FY17, and my plans for implementation. Bear with me as you might find some of my thought process helpful in conceiving your own financial New Year’s Resolutions.

My Financial New Year’s Resolutions

For my regular readers you know that my family recently traded an income for my wife’s ability to be a stay at home mom. For those who do not, you can read about it here. Part of what made our transition easier was we lived off a single income, the lower of ours, from the beginning. So making it work on a lower income was not a problem. However, it does make some of my goals a stretch:

  • Save 1X Our Expenses – As we progress towards financial independence the most important thing is to continue to save. Based on our past budgets and projected income it should be possible to hit 1x our expenses. To do this I mapped out the trends of our budget over the last 2 years. Comparing it to my projected salary shows that this savings rate is doable. Given my wife’s change in status we can no longer contribute to a Dependent Care FSA. In order to facilitate these goals I’ve pushed this money over to my Employee Stock Purchase Plan to ensure I am not tempted to spend it.
  • Reduce Our Mortgage by 10% – I may cheat a little bit here as I consider my mortgage payment as part of my savings rate, like a bond. That being said simply making my monthly payments should be pretty close to this number. Without doing anything I will achieve 9%, so really I just need to throw in an extra 1%.
  • Invest New Money in a way that achieves no less then 3% return over the long run –
    My current mortgage returns 3%. As such any investment I do not place in my mortgage should exceed 3%. Achieving that 3% return over the long run should be relatively easy. First, let’s note the delineator, over the long run. This means I can currently choose stocks (which historically return 7-8% over longer periods) and savings bonds (3.5%). As the year progresses I suspect other opportunities will open up to achieve 3%. I suspect the Fed will announce more than one rate increase next year, so bonds will likely rise above this point as well. Uness the market goes appreciably higher I will likely forgo bonds in favor of stocks. Simply put my asset allocation is slightly safe investment heavy after the mortgage pay down I did in 2016, so by placing new money in stocks I will return to my desired allocation. I ensure I always follow my investment plan no matter what happens to the market.
  • Use Credit Cards to fund travel to 1 international destination and 2 domestic locations without an impact to our finances. – I always ensure I set one resolution that is around today’s fun to ensure I don’t get stuck in a trap of always waiting for tomorrow. This is that New Year’s Resolution. I typically achieve about 2-3K in credit card cash back via Account signups. In addition I typically collect another 1-2K in cash back on my normal expenditures. So essentially I have between 3-5K in available funding to do my trips for a family of 4. I also have some free hotel night stays saved. So far we already have a low cost trip to a Caribbean island booked (total cost about 2K + food which we usually source from the grocery store). The second and third trip will likely be driving trips to keep costs down. Given we normally spend about 5K a year on vacations I see this as doable.
  • Donate at minimum the equivalent of 5% to charity. – We wouldn’t have a good list of resolutions if I didn’t include charitable giving. Giving to charity is something thats proven to bring people more joy then spending it on themselves. Remember all those less fortunate, and be sure to set a charitable giving goal. In my case some of this goal is money and some comes in the form of items I will donate as we clean out excess items. In either case I will ensure the items go to people in need which will benefit in allowing me to know I helped out and also on my taxes. I also plan to do at least one or 2 time donations which are not measured here.

What are your New Year’s Resolutions? How do you plan to achieve them?  Happy New Year everyone.

6 Comments

  1. Mustard Seed Money
    Mustard Seed Money December 30, 2016

    I love your list. I think it’s awesome that you are donating to charity as I haven’t seen too many other bloggers share that type of information 🙂

    I look forward to hearing about your travels throughout the year and hope you and your family have a great 2017!!!

  2. Mrs. Groovy
    Mrs. Groovy December 30, 2016

    We definitely need to get with the program on reaping those credit card rewards. The thing I need to to be careful with is not using rewards as an excuse or rationale for needless spending.

    Loooking forward to folllowing along with your journey in 2017. Happy new year!

    • fulltimefinance@fulltimefinance.com
      [email protected] January 1, 2017

      Thats always the risk. The credit card companies are banking on us giving in to temptation. Happy New Year and welcome to 2017.

  3. Biglaw Investor
    Biglaw Investor January 4, 2017

    Where are you going in the Caribbean? I love it down there. Just got back from a trip to the US Virgin Islands. If it were up to me, I’d always be down in the warm weather and sunshine.

    • fulltimefinance@fulltimefinance.com
      [email protected] January 4, 2017

      We have a trip planned to Martinique in February. It’s in the French Antilles. We went last year to a different location on the same island. Getting away from the Norh East weather at least once a winter is a must.

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