New year, new resolutions

Someecards I hope you're not too exhausted from your yearly visit to the gym on New Year's DayAJ: A new year always really inspires me. I’m a total “new year, new you” sucker, and I’m so stubborn that resolutions usually stick with me, so I like to really push myself (at least for a few months which I think is pretty good considering how the rest of the world treats resolutions!). Kirby and I have totally different approaches to setting goals. My approach is that I want to take on totally attainable things that I’m not currently doing but could and should be doing. Kirby takes on a more reach-for-the-stars mentality, pushing himself to super-human lengths that might not be physically possible (love you, babe!). Either way, goal setting is an important part of growing and improving!

Like many people, our goals span both our personal and professional lives where finances are an underlying focus of all that we do across the board.

AJ’s 2014 goals (drum roll, please!):
- Read 5 specific books. Kirby pointed out in our post from Monday that I read constantly, they’re just mostly mindless books. Mindless=happy. In 2014, though, I’m committing to read mentally stimulating, boring, professionally beneficial books that lack plot and character development. And I’m going to love it.
- Learn to knit. I failed at this in 2013 despite my sister-in-law’s best efforts, loads of knitting needles, a ball of yarn and the beginnings of a scarf already provided to me. Her knitting is too pretty, and I’m too scared I’ll screw it up! But in 2014 I plan to screw up a lot of knitting because I lack domestic skills of this nature and I like learning new things.
- Learn how to bake. Just suggesting this as a goal for myself caused me stress. Our family and friends will tell you that I’m actually a good cook but baking and I don’t get along. There are specific steps you have to follow, things have to be measured, it’s all too much. But my husband grew up with a mother who did things like make homemade bread and my sister-in-law works with yeast like it’s not even a thing, so in 2014 I’m committing to buying yeast for the first time, at the very least.
- Make money money, shake money money. Everyone I know has goals related to their salary, and I’m at a point where I hope to reach the goal I set for myself going into my career within this year. The hardest part about declaring this a goal is that the possible disappointment that will accompany this goal in 2015 if it doesn’t come into fruition will be rough, but I’m declaring this a goal on a leap of faith and banking on those boring professional books to get me there :) (and maybe some hard work and determination if I can fit it in with the knitting and baking).
- Just say no. For one week a month I’ll go totally alcohol free. No occasional glass of wine after work, no margaritas on the weekend. 7 solid days of living a healthier, more focused lifestyle.
- Bring in $100 more per month. I haven’t cracked the nut on this one which probably means I’ll struggle to accomplish it but creativity is where I shine so I’m determined to find a way.
- Maintain my ideal weight. This has to be discussed annually otherwise I’ll fall off the horse more times than I can count. I’d like to be my ideal weight for the entire year post-January (you have to allow yourself time to actually get to that weight before you can maintain it, I hear).
- Create and maintain a garden. I am the child of a master gardener and now have a beautiful yard that is begging for homegrown fruits and veggies, so this year my dad (the Bob) and I are going to build the garden beds, plant our bounty and then it will be up to me to keep the little buggers alive and edible. No pressure.

KJ’s 2014 goals:
- Read 5 books. So I do almost no leisure reading outside of articles, news, professional publications, etc., so I’ve got my sights set on some books I would like to read throughout the year. This is less than one book every two months…should be doable, right?
- Professional development. Continue to invest in my own “human capital” (i.e. unique earning potential from the ability and skills used to generate an income) by learning new technologies, keeping up-to-date with world-wide developments and continuing education (CE), and emphasizing both business development through prospecting as well as professional relationships.
- Maintain my ideal weight. Much like Angela’s comment, it’s best for me to keep this front of mind too. I come from a time where I used to work out constantly throughout HS, but I’m a bit of a lazy person these days when it comes to working out. Eat better and workout more, here we come!
- Double blog readership. So it seems strange to mention this to our readers, but….you all have helped build it thus far to what it is today (thank you!). So how can you be a part of our goal? You share our posts with just one other person…easy enough…plus it helps us all be just a little bit smarter with our finances when we work together and grow our knowledge together to make “financial independence” a reality we all can achieve!

Phew! Even though we’re quite open with this blog, it’s still hard to articulate our goals to the rest of the world. Maybe that will be the motivation needed to see that all of these are accomplished by this time next year? Hold us to it!

OUR combined 2014 goals (his, hers, ours concept – important to work together!):
- Work out twice per week. This seems lame and at certain points will be no big deal, however, there are certain weeks/months of our year where we get really, really busy and even committing to twice per week seems absurd. This means more super early mornings spent together on the floor of our work out room crying in pain and telling each other we hate each other. It’ll be fun, really!
- Increase our net worth by 35%. This is a calculated number and aligns with our overall future planning goals. It seems like a really big goal this year, but with the bulk of our planned expenses on updates to our home out of the way, new tires, brakes and batteries in both of our cars and curtailed spending on the horizon, we really feel like this is obtainable. We’re at a point in our lives where our savings potential is greater than any return our accounts could earn (and it seems that will be true for quite a long time!), but we’re hoping for that date some time where we can earn more than our incomes…might be a LONG ways off, but we’re working toward it!

    Do you have any recurring New Year’s resolutions?
    What are your new goals for this next year?
    We would enjoy hearing how you’re going to accomplish your goals.

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Starting fresh: learning to set achievable goals

Someecards Thank you for not laughing at my absurdly unattainable New Year's resolutionsKJ: It’s official, this is our last post of 2013…2014 *ding ding ding* here we come! As is almost always top of mind when heading into a new year, we’re going to talk about those good old New Year’s resolutions. You know, the answers to what are your goals and what do you hope the new year will bring? We all get that feeling of setting high aspirations for the start of the year only to find that a month later we (1) haven’t done anything to get on track, (2) realize the goal wasn’t so attainable, and (3) we may no longer even remember the goals we set. For this post, we hope to help outline some ways to not only set goals, but set BETTER, more attainable goals.

2013 wasn’t much of a different year for us from a goal setting standpoint. We had several goals we were on target for, some we didn’t address at all, and others we wish had been a larger focus. Just like with all aspects of our lives we set goals for where we hoped to take this blog and happily met many of them thanks to our loyal readers. We hope you share our blog with friends of yours that could use financial guidance.

AJ: 2013 was fairly remarkable for me with regards to upholding my New Year’s resolution. I mentioned previously that I gave up shopping and did far better than I think anyone would have guessed was possible. I fell short on some of my other goals, though, which is fueling my 2014 resolution fire fiercely. I love having specific goals, and this time of year always excites me.

AJ & KJ: For the goals we did accomplish, there were some clear distinctions that made them different than the rest:

Set goals that are finite
They didn’t have a day eons into the future or a target with no particular end. I.e. they weren’t simply “increase our net worth” or “read.” Instead, they had specific dollar, date, or resources outlined.

Break the goals into small chunks
While large goals may be harder to accomplish, they can be much more easily accomplished if you set periodic milestones along the way. Using a marker for every couple weeks or every month is often a good way to see that you’re on track. For our goals, we had a simple checklist that I looked over each month to see our progress.

Don’t create goals around something you cannot control
Setting goals for something you have little-to-no control of is futile. Don’t say, we need to increase our net worth by $X and just expect to get there. There could be an economic pullback that thwarts (partially or significantly) your efforts. Instead, set parameters about what you CAN control: your income and your expenses. Set regular monthly goals for each that can help you achieve your net worth goal, but understand there could be outside factors that cause you to achieve that goal quicker (or slower).

Create a mix of goals
Don’t put all of your eggs in one basket, so to speak. It’s helpful to have varied goals that span various disciplines: financial, tasks to learn, projects to complete, personal vs. professional, etc. If your goals are all just about getting healthier, and you set goals for working out, eating better, and changing some of those habits, slipping up on one will often cause a domino effect for your other goals, so tackling things one step at a time with less interrelated goals may help you accomplish them all just a little bit better.

Make a list of HOW you can achieve them
Putting pen to paper and creating a list of not just WHAT you need to do, but HOW you can actually achieve it will dramatically improve the chances of success of your goals. For our savings goals, we have targets for retirement, non-retirement, short-term vs. long-term goals, and we break it up into manageable chunks for each month. Not that every month will be exactly at, above, or below target, but the hope is to keep our eye on the prize and know how it is we can actually get to our goals. This process can also shed light on how realistic your goals are too. If you set a goal and then realize you don’t even know HOW to get there, then maybe it’s time to rethink how realistic or possible the goal is.

Set goals for yours, mine, and ours
Much like our post on his, hers, and ours where we discussed merging or separating finances, it’s important to look at setting both individual goals AND joint goals. Think about what you want to accomplish and how you can accomplish it, but also look at setting goals as a couple that you can work on together. Sometimes the joint goals are a little easier to accomplish since you have two people to help keep an eye on the progress to make sure you don’t slip up.

So, what goals have we set?
We each have set goals for:

  • read at least five books throughout the year (for Angela, it is a specific list of professional books since she reads 2+ relatively mindless books a week) – AJ: Mindless seems a little extreme! :),
  • savings goals month-by-month,
  • workout goals – somehow these always creep up in our effort to be more healthy (but the progress over the years ebbs and flows), and
  • create & maintain a garden in our new backyard (this should help with our related workout goal too!)

      What are your New Year’s resolutions?
      What is in store for you next year?
      Do you have tips on setting goals for you and your family?

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    A year in review

    AJ: It’s been another incredible year for us. We’ve been abundantly blessed again and continue to be thankful for the lives we have. Here’s our 2013 in review!

    TECHNICALLY we got two kittens (do you remember seeing Swiffer cat?) in 2012, but in 2013 they destroyed a lot of stuff.

    Coffee Pot Broken By Cats

    And moved a lot of stuff (seriously, they have Herculean strength).

    Kitty Litter Box Moved by Cats

    Two of our best friends got engaged!

    Sally and Justin Proposal

    We celebrated our third wedding anniversary.

    Kirby and Angela Wedding Picture with White Wall as Backdrop

    We bought a new house and officially survived the Icepocalypse 2013.

    Kirby and Angela New Home Purchase

    We moved and sold our first home.

    Bella in a Packing Box Ready to Move

    We took the trip of a lifetime part two (see how we planned: Travel: part one, two and three) to Spain and Italy with AJ’s parents.

    Retiro Park Madrid Kirby and Angela Photo

    Kirby and Angela on the Amalfi Coast

    Kirby’s brother got engaged to this beautiful woman!

    Russell and Amie Wedding Proposal

    We went to Napa (boy, did we ever go to Napa)!

    Restaurant Table in Napa With Lots of Wine Glasses

    Kirby and Angela Photo in Napa

    And we had the most celebration-filled year of our lives.

    Angela, Kirby and Family in Fort Worth Sundance Square

    Angela Kirby and Mimi at a Restaurant

    Angela and Kirby and Family in Napa

    Thank you to each of you for adding to our incredible year. This little project of ours continues to enrich our lives and our relationship and we hope we pass some of that onto each of you!

    KJ: And all the while, we never stopped budgeting and planning! See…who said budgeting can’t lead to excess amounts of fun!? So pull out that budgeting software of choice, and get your budgeting engines revved!

      What did your 2013 entail?
      Did you take any trips?
      Share with us how your year was!

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    Too much or not enough withholding, how to know

    Stick figure yelling "Yeah, taxes!"KJ: So with as complex as the tax code is – kind of like being asked to do differential equations while performing brain surgery on top of a tight rope stretching across the grand canyon – one of the things that impacts you on a regular basis that you don’t necessarily stop to think about is your income tax withholding. And so with that brief introduction, I present to you one great (very quick) resource: the IRS withholding calculator. You enter some basic information about your income, payment frequency, dependents (i.e. any little ones running a muk), etc. and in about 5-10 minutes it provides you with a projection for your taxes owed for the year. While it is just that – a projection – it is a useful tool to see if you’re where you should be as well as start to look at how next year may turn out.

    Given that it’s about time to close out this year and start planning for next year, it would be helpful to see if any withholding adjustments might needed in January with your employer on your W-4 or if a modification to your quarterly tax payments are needed. Waiting until you file your taxes in the spring to realize “uh oh, I need to make a change!” is not really the best solution.

    While this calculator is a good resource, it is not THE calculation with all factors for determining your income tax, so give yourself a little bit of wiggle room just in case. Ideally, you would like to finish your tax return with as close to $0 due or refunded. Huge refunds = giving the government an interest free loan for a year, and huge tax payment = depressing budget fail. If you have a complex tax situation with lots of investments, complex income arrangements, and multiple support obligations, then maybe it’s better to let your CPA do the heavy lifting. In either case, consider a few factors:

    Have you switched jobs?
    Maybe you found a great opportunity or maybe you were needing a change of pace. Either way, having varied income throughout the year can make it a challenge to keep up! Run the numbers and see if your new job is withholding what they need to be, and see if it’s enough for a full year at the new (higher or lower) level.

    Have you been promoted?
    First off, congratulations! With the economy improving these last four years, maybe you were in line for a big promotion? Higher income = higher taxes, so plan ahead and make sure you’re not caught off-guard when the tax man cometh to taketh away.

    Did you or a spouse stop working?
    With one less income (hopefully by choice and not a surprise!), your tax situation may change drastically. Understanding what adjustments can be made is a good start to making sure you stay on track.

    Did you acquire a little one?
    The stork could have brought your family a little one. While certainly not an offset to the additional food/diaper/toys/you-name-it costs you will incur, you get a little bit of a tax benefit to support a dependent (sounds very grown up, doesn’t it?).

    Did you sell a house and are now renting?
    With some of the advantages of home ownership (potential deductibility of mortgage interest, taxes, etc.), you might find that even having a similar outlay for rent each month could end up costing you more in federal income taxes each year. Understanding why and how this may impact you is critical!

    For us, we sold a home and bought a home, so we’ve got to dig a little deeper into next year’s plan to see if any tax implications may change from what we had experienced these last five years. Plus, with housing prices recovering in most areas around the U.S., look to see this reflected on next year’s real estate tax bill – boo for taxes, but yeah for higher prices, why can’t all the increases just come in the year you sell it!?…

    Unfortunately, we didn’t cover any of you that are impacted by a STATE income tax…I’m sure there are calculators out there that can help with those too, so please leave us a comment if you’ve found any tools that help you and your family!

      What do your results show?
      Do you need to make any changes for next year?
      Share with us what you do to try and stay on top of this each year.

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    What is the value of insurance?

    AJ: For most of us, insurance is a sometimes-legally-required, income sucking vortex that you rarely actually tap into for your benefit. HOWEVER, it only takes one too-close-to-home story to force your eyes open to the benefits of insurance, and as is true with all financial decisions, pre-planning is key to ensuring you have the power of research and time on your side when selecting the right insurance for you and your family.

    KJ: Insurance is a tool to help cover catastrophes that may occur – plain and simple. It’s not to get a sudden windfall or profit in the event of a disaster. In fact, it’s basically a zero sum game (technically negative sum game if you subtract out the profits that the insurance companies make). So, why purchase insurance?

    I buy insurance for the same reason I buy lottery tickets: "what if"

    It helps cover you in the event of a disaster
    Whether you get in a car accident, have a damaging windstorm pass through, or have a fire, chances are you won’t be able to rebuild to new on your own. That’s where the insurance policy comes into play. It helps make you whole (or close to it depending on what types of policies you have) to get you back on your feet since it would likely be difficult (to impossible) to do so on your own.

    Insurance is not for minor emergencies or slip-ups
    Insurance is not used to repair that broken window, fix the siding that’s peeling on your house, or any other “routine maintenance” that crops up. Those are up to the homeowner to periodically take care of on their own. Don’t expect anything minor to be covered by insurance as you’re deductible is designed to push some of those costs on to you. Otherwise, we would get the insurance company involved for EVERY little thing and thus drive up costs for all.

    It’s designed to be a cost sharing mechanism
    Your regular premium payments essentially begin to “front load” the payout you may get at some unknown date in the future. In fact, a lot of smaller insurance payouts are simply giving you your money back after years of paying in! Furthermore, most insurance policies have you pay for a certain amount of the costs out of pocket (known commonly as a deductibles, copays, coinsurance, etc.), and you may even share in a portion of the costs above a certain limit. If you’re fortunate enough to not have to file a claim with your insurance company, your premiums are essentially going to pay for the payouts for those less fortunate – you generous gifter, you!

    Bad luck might be following you
    Unless you can predict the future and know exactly when something may happen to you (please call me, as that would be quite handy in my profession), then it’s important to plan for the unexpected. You could run into a string of unfortunate events (natural disasters – not all are covered under your policies though), and it could be just what you need to help get you back on your feet, so you’re not derailed permanently. Whether it’s a car accident, storm that rolls through and damages your home, or sudden disability derails your plans, you never know when life will happen and what it may bring, so do your research on the coverage you and your family needs.

    It can give you much needed peace-of-mind
    Knowing that certain catastrophes are covered by your insurance policy may help you sleep a little better at night and worry a little less about something unknown derailing you and your family’s goals. It could cause you to side-step a little bit (as you have a deductible to pay afterall), but it helps with the peace-of-mind to know that you won’t lose it all.

    So, where do you go from here?

      Find a deductible that’s right for you
      First and foremost, make sure you build $1,000 in your emergency fund (once that’s reached, look to build 3-6 months of living expenses in a highly liquid savings and/or investment account). Then, based on your situation with how many cars you have, whether you own or rent, etc. you should look to have a deductible that’s reasonble, but not too low. I’m not a fan of having a deductible for cars or homes any less than $500 (much higher threshold for medical expenses) as you’re just throwing money away each month if your deductible is too low. Do a quick analysis on the premium savings you could see by raising your deductible to the next threshold. If it costs you an extra $150 per year to have a $500 versus $1,000 deductible, what are the odds you’ll have a real worthwhile claim within the next three years? If the answer is ‘slim’ then raise that deductible and keep the premium savings to yourself. Use the extra savings to build up your emergency fund and be able to put you on even better footing in the long-run, so you’ll be even more equipped to deal with the unexpected.

      What coverage types do I need?
      At a minimum you should have auto insurance (most states legally mandate a minimum amount of coverage), homeowner’s (or renter’s) insurance, and health insurance (soon to be mandatory thanks to the Affordable Care Act), but you should also look to have some other core insurance policies: life insurance, disability insurance, and long-term care insurance (particularly as you get older and are approaching retirement) – of course the coverage amounts and types of policies may be different from situation to situation. So, if you don’t have any of the coverages listed above, now is the time to speak with an insurance agent to start getting coverage. Be sure to shop around too as not all policies or companies are created equal!

    Now it’s YOUR turn to reflect:

      What role does insurance play in your life?
      What are your views of insurance?
      What policies have been critical in your family’s life?

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