This is probably my most personal post so far. If you’re not interested in seeing details about my finances, I recommend you check out other parts of my site like this one.
In 2017, my goal is to focus on growth in all aspects. Last year, I was able to achieve many things I thought were necessary to get me started on the real financial independence journey. I want to use this year to build on the major milestones I recently hit.
Budgeting after debt-freedom
After paying off all my debt, I now have the freedom to build my financial portfolio while making sure I never go back in the red. It’s a great feeling, but it also comes with a ton of responsibility and planning.
Ever since I’ve been debt free, I’ve slipped up on my budget a little more often than I would like. While it’s been great to not owe anyone, it’s also been an opportunity to learn about my real tendencies when it comes to money. As a result, I had to become even more rigorous with my budgeting and tracking.
Nevertheless, I am extremely happy with all the progress I’ve made. In less than 2 years, I went from more than $25,000 in debt and not a dollar to my name to this:
I also learned so much about managing my finances through blogs, books and podcasts. In addition to paying off debt, I acquired enough knowledge to be able to set long-term financial goals with confidence.
Here are out some of them…
Build a huge emergency fund
Most financial experts recommend a cash cushion of about 3 to 9 months of expenses. I plan to do something similar but with a slight twist. Instead of picking an arbitrary time period (3 months or 1 year worth of expenses), I prefer saving enough money to cover certain emergencies I know are likely to happen.
For example, hospital stays are very common. One of my goals is to have enough to cover the average out of pocket costs.
If everything goes well, it should take me about 3 years to reach a fully funded emergency cash reserve. That’s kind of a long time, but on the flip side, I will then be able to invest thousands almost every single month which will make it all worth it.
So far, I’ve only been investing in my 401(k). I put in just enough to get the employer match and will keep doing the same until I feel comfortable with the amount of cash I have in savings. So the investing part is gonna be boring this year.
That’s not to say that I’m not doing well in that regard. I’m still very happy with what I’ve accomplished so far. But things are gonna get a lot more exciting once all my extra income can start going towards investing. Here are some of the things I’m looking forward to invest in:
- An individual retirement account (IRA or Roth) to complement my 401(k)
- A Health Savings account to save money on health insurance premiums and taxes
- A taxable investment account to start building my financial independence fund
Currently, I put all my money in one index fund that tracks the S&P 500. Once I have more to invest, I may add an international index fund, but I plan to keep it cheap and simple across the board.
What about a house?
Although I would love to take that leap and own a home, that’s simply not something I’m ready for. I live and work in Boston MA and plan to stay there for the near future. The house prices are so ridiculous here that I’ve almost come to grips with the fact that I will have to either relocate or wait a long time if I want to buy something.
I’m not a fan of gigantic mortgages and I don’t subscribe to the common belief that it’s ok to spend tons of money I don’t have on a house just because I can build equity.
Other life goals, Your Thoughts
I also intend to use this year to grow my blog. Last year, I was just starting out and was winging it most of the time. This time around I will try and have more of a set road map and actually take time to learn the business side of it.
I also want to keep finding ways to increase my income, whether it be blogging, freelance writing, or performing well on my day job.
How was your year? What are some of your goals for this year?