New Year’s Resolutions

Happy 2015

AJ: We knew months ago that our resolutions for 2015 would be hugely focused on finances, and we’ve been mentally preparing ourselves for tightening our belts.

KJ: 2015 is a year of refocusing on building up some of our emergency funds and regular savings that 2014 demanded from the various unexpected turns for some of those emergency fund items spent on our home and health.

Such an important part of giving you and your family direction throughout the year is setting good goals that are Specific, Measurable, Attainable, Realistic, and Timely (S.M.A.R.T.), so we wanted to dedicate another post this year to the goals we have set for this year (we’ve spared you some of the nitty gritty of the specificity part though!). Hopefully you’ll be inspired to do just the same!

It doesn’t help to create goals that sound good but that you don’t actually put pen to paper on what you need to do to keep the goal in front of you to actually achieve it. If you say you want to read 12 books a year, then set specific targets of which book (or types of books) you want read at certain milestones, so you can better hold yourself accountable.

Most of the goals for this year aren’t as personal as they are financial. Ultimately, we ended 2014 about where we hoped to be despite some of the financially significant setbacks. The good thing (for what it’s worth) about having a lower net worth, is it’s easier to increase it from a percentage standpoint in the early years – something not likely to be true as we continue to build and grow. I.e. 35% increase on $100,000 is more palatable with setbacks than 35% on $1,000,000. Not so easy to just “trim” your way to get to such a large increase on $1,000,000!

Here are some of the goals we have set for ourselves looking into this next year:

Combined
Net worth – More lofty goals here for 2015, but again, the benefit of coming from a lower net worth is that large percentage increases are generally easier to maneuver through. Absent any big market disruptions or large unforeseen expenses to derail the plan, we might just hit it, especially with our major home renovation costs behind us. This means saving more and spending less, easy as pie, right?
Charitable efforts – We are working on creating a specific target for this year (slap on the hand for not having a SPECIFIC goal yet!), and we plan to look more closely in the next month at the time and monetary commitment to see where we can do more than we did in 2014. The important piece for us with regards to charitable efforts is to be realistic. We have demanding jobs and lives, so ensuring we commit to what we can feasibly give of our time is even more challenging than what we give financially. Thus why having a plan is so important!
Continue to maintain a healthy style – This one involves some impact to the budget each month through our boot camp we participate in and gardening costs. Although there are a number of ways to make this expense lower, the boot camp is just what we need in order to keep us motivated and on track. There’s something about not having to think about planning the workout itself, mixing it up for variety, and actually getting some motivation from those around us that makes the boot camp we’ve been doing since July a perfect fit. Other items impacting our healthy lifestyle are eating more vegetables thanks in part to our gardening efforts as we head into our second year of having a garden with fresh arugula, potatoes, green beans, squash, and tomatoes to name just a few. Yumm!
AJ: As the planter of said garden I’m committing to better mapping out what we can realistically plant and grow vs the two acre garden I apparently purchased for this year. I’m not sure how all home gardeners feel, but I spent way more money creating, filling and re-filling my garden than I ever would have had I purchased the same amount of produce from the store, so this year I’ll more accurately plot out my beds and not over buy seeds and plants.

AJ
Continue to develop professionally – This is the first year in the last seven that I’m going into without a really solid set of professional goals. Generally, I want to be a better employee and boss, provide value in as many ways as is possible, and I want to let go of some of the daily frustrations that detract from my overall happiness.
Stay the financial course – Shamefully it was I who wanted the house painted top to bottom, I who purchased new bedding, boat loads of plants and seeds and patio furniture to boot! It was my car that needed servicing, my wardrobe that needed mending and my trigger finger that did online shopping. Therefore, it will also be my cross to bear to ensure that we’re on the straight and narrow this year. Some months there were so many transactions I genuinely stopped writing them down – my hand was getting tired! We make an awesome team, but at the end of the day I know that my iron fist-management of our variable expenses is the only way we stay on track, and stay on track we shall.

KJ
Read four financial books – I didn’t read all of the books that I planned for 2014, but I met 75% of the goal, so some of those are making an appearance on my list of books to read in 2015. Good thing I had a random inkling to read a book a couple days ago. Great kick off for 2015 – one down!
Complete household projects – This year’s list of things to-do around the house are fortunately not improvement projects that will require some moolah, but I feel that I need some kind of list to actually check off as I go for those little things I’ve been meaning to take care of around the house. Most of the projects will just take an hour or two to complete, so hopefully I can check off all that’s on this list in the first quarter of 2015.
Continue to develop professionally – Through ongoing Continuing Education (CE) requirements, it’s not only required for many of my certifications and groups I am a member of, but it’s something that’s very important to focus on all throughout the year. I finished all of my certification requirements early this year, and I hope to do the same for this next year too. Human capital development, here we come!

We couldn’t wait for a clean start with the new year! 2014 was a doozy to say the least, and we’re looking forward to a more future-focused year.

    So, what are your New Year’s resolutions?
    Let us know what goals you have set for yourself!

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What a year!

What a year!
AJ: A few times in the last month I’ve found myself thinking and saying “good riddance, 2014!” and yet, when I sat down to outline this out-of-the-norm year, it had a lot of high points!

In 2013 when we laid out our budget there were all kinds of unknown variables we were up against that we couldn’t have anticipated but were able to work through given our slush fund, our years of planning and saving and our commitment to staying the course in the midst of significant expenses. Good thing for emergency funds!

We’ve covered details of what I’ve lovingly deemed “the year of spend” throughout the year, but as we prepare to move forward into a year of focused saving and re-prioritization, here’s what 2014 looked like for us:

1. Medical expenses hit all-time highs.
We discovered we’re now old, physically speaking. We kicked off February with KJ in the hospital for a week with a mysterious, very scary illness that resulted in us hitting his insurance deductible in a day. We maximized that with a year full of medication, physical therapy, doctor visits and more. Who knew there would be a benefit to hitting your medical deductible early in the year!

Then, in March, AJ got a medical diagnosis that added significant monthly expenses in supplements that were unplanned and not covered by insurance which will continue to impact our budget monthly.

After two rounds of eye-opening physical changes we signed up for a monthly boot camp in July that adds significant expense to our monthly budget, but it has reduced stress and waistlines and gives us an awesome outlet for our competitive energy, we’ll take it!

Sure there are ways to spend less in this area, but it’s what really works for us, our lifestyles, and making a commitment to actually exercising!

2. Home renovations.
Our first full year in our not-so-new-anymore-house brought with it a ton of changes that checked off a lot of our wish-list boxes:

    - We spent a few back-breaking weekends refinish our deck that’s now beautiful, sturdy, well-used and loaded with gorgeous furniture.
    - We installed a huge, privacy-giving, expensive fence that completely changed how we love and use our backyard.
    - We built raised beds for produce which we’ve successfully cultivated and enjoyed all year.
    - We painted the entire inside of the house which immediately made it feel more cozy and like our home.
    - We replaced our previous builder-grade washer and dryer with shiny, new machines that I adore.
    - We upgraded our TVs. This one doesn’t feel like a renovation but it was on the list of things we wanted for our new home, so we’re thrilled, and for budgeting considerations, this is expensive enough to count as a renovation :)

3. We committed to donating more.
We were both raised by generous people to be generous people, and it’s a combined passion of ours that becomes increasingly important to our family. Historically we’ve split our financial and time commitments 50/50. This year, our jobs and commitments didn’t allow for as much time, so we shifted to a 75/25 financial vs. time commitment. It certainly had budget implications, but the long-term benefit to our community is well-worth the budget sacrifice we made.

We’ve had a banner year, no question about it. We’re infinitely more appreciative of our health and our physical well-being which we absolutely took for granted. We love sharing our home with family and friends and are thankful to have a physical representation of our love for each other and our families. And most importantly, we’ve outspent our budget and have lived to tell about it. KJ is always more level-headed about spending and about small set backs being just that, small blips on the radar, not the major crises they can feel like in the throes of course-altering changes and we’re looking forward to a more lean year ahead.

We wish you and your family health, happiness, perspective and budgeting in 2015!

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Time to update your savings plan for 2015 – new 401k, HSA, and other contribution limits increased!

2015 Contribution Limits
KJ: With updated savings limits for 2015 being finalized by the IRS recently, it’s time to plan for this next year for any changes to your savings plan. Some limits were increased (401(k), SEP, SIMPLE), but others remain the same (IRA). Either way, it can mean more strategic cash flow planning for your family, so you can eek out a little more savings for your future selves.

401k Employee Contributions
The IRS updated their contribution limits for what you can save to your 401(k). Regular & Roth 401(k) contribution limits for 2014 were $17,500, and this number increases $500 to $18,000 per year for 2015. And, if you’re over the age of 50, then you can contribute an additional $6,000 for a whopping $24,000 per year.

Whether you contribute to the 401(k) pre-tax or via Roth, the limit is the same! That works out to a savings of $1,500 per month. Whether you’re early to the saving game or late to the game, contributing SOME amount is critical. Then, as you get better and better with your savings, work to try and maximize this over time.

IRA Contributions
IRA contribution limits are unchanged for 2015 from the 2014 levels. So, each person can contribute up to $5,500 for 2015. If you’re over the age of 50, then you can sock away an extra $1,000 per year for a total of $6,500.

HSA Contributions
HSA contribution limits have increased slightly for 2015. For single individuals on a high deductible health plan (HDHP), you can contribute $3,350 per year. For family plans, you can contribute just shy of double that figure at $6,650. And, if you’re age 55 or older (not to be confused that this is a different age than the IRA and 401k “catch-up” contribution limits), you can save an additional $1,000.

SEP IRA Contributions
These accounts are typically just for those who are self-employed, and the contribution maximums are quite substantial. For 2014, you can contribute $52,000. For 2015, this figure is increased to $53,000.

SIMPLE IRA Contributions
Some people have access to a SIMPLE IRA through work – not uncommon for smaller employers, and these contribution amounts have increased for 2015, too. The old figures for 2014 were $12,000 with a $2,500 age-50 catch-up. This figure is increased $500 per year to $12,500 with an extra $3,000 contribution for those who are over age 50.

Read more about SEP IRAs and SIMPLE IRAs on the IRS site about Individual Retirement Arrangements (IRAs).

Regular savings
With your regular savings account(s), you can sock away any amount per year or month that you want until your heart is content!

Investment savings
If you have a long-term investment brokerage account with some good old stocks, bonds, mutual funds, etc. then you have NO limits on what you can contribute each year for these accounts either. The sky’s the limit!

Setting your plan for 2015
With LOTS of ways to save in tax-advantaged ways, there typically isn’t a shortage of ways you can save. If you have a 401(K) at work, an HSA, and an IRA, then $26,850 is what you can contribute between the three accounts – that’s about a hefty $2,200 per month! For a spouse or significant other in the same situation, double that figure for a total of $53,700 for your household! Woah!

And, just because you don’t have a 401(K) through work, doesn’t mean you should throw in the towel and stop saving. In fact, it means it’s all the more important for you to contribute to your regular savings and investments to build your net worth that way over time.

    What are your savings goals for 2015?
    Will you be changing your contributions for any of these accounts?

Time to update your savings plan for 2015 - new 401k, HSA, and other contribution limits increased! is copyrighted by TheSimpleMoneyBlog.com without consent to republish.

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Year-end financial evaluation

Year-End Financial Evaluation
AJ & KJ: Tis the season where we start to talk about the changes a new year will bring and reflect on everything from the past year. Before moving forward though it’s important to take stock of all the life changes that have occurred that will impact the next phase of our lives.

1. Changes in incomes.
Whether it went up or down, you consolidated into being a single-income household or you won the lottery changes in income top the list for considerations that require an overall financial reevaluation. Perhaps you’re considering a significant career change or a return to education. All of these things are major factors in your financial future. Compare year over year income and spending levels to identify commonalities from which you can begin forecasting the next year’s budget (and savings!).

2. Health changes.
Until you have reason to give pause with regards to your health it’s an out of sight, out of mind variable. This year we both underwent new-to-us medical diagnoses that have impacted our lifestyle and our budget significantly. We’ve added a monthly boot camp and hefty expenses of supplements and vitamins which will change the way we allocate our available funds in 2015.

3. Family status changes.
We’re at that point in our lives where most of our friends are now married or in a committed relationship and have babies on the brain. We’re the very proud aunt and uncle to three munchkins and holiday shopping always reminds me how expensive those little boogers can be. Whether you’re expanding your family, taking care of elderly family members or just planning for the future these can be expensive variables.

4. Change in housing status.
Bought a home? Sold a home? Bought a home and have yet to sell the other home? Thankfully we’re at the end of a year that has seen a lot of home improvements and renovations, so it’s all blue skies and rainbows from here – until a tree falls, a pipe bursts or I find some new Pinterest-inspired monstrosity of a project. It’s hard to plan for the unknown, but build your budget based on what you think you’ll see with regards to housing changes and don’t forget to maintain a healthy emergency fund for all those unknowns.

5. Marriage status.
Congratulations! For better or worse a change to your marriage status impacts more than a few significant pieces of your life and budget. 2 vs 1 is a very different conversation and requires planning! It involves a complete review of your finances from savings to beneficiaries of your accounts and life insurance (just to name a few).

We can’t wait to start our 2015 planning and have several of these considerations to address. The prospect of a new year is always exciting and we’re looking forward to a more successful, healthier, calmer 2015!

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Look at your past budgets. You may be amazed

Illustration of Information Search Metaphor
KJ: We just went through this exercise, and it was quite interesting. I have used Quicken since the beginning of (my) time with an income, so I have quite a few years of history to be able to reference. I can slice and dice the data lots of different ways if I want to hone in on certain categories or just look at the high level information. What we did was look back to year-by-year spending since 2010 (the year we got married). With a good four-year history of LOTS of changes with moving homes, buying two cars, taking several (great!) trips, and adding in some home renovation costs in recent years, there was a lot to look at! Talk about a lot of one-off items that have come up over this (relatively) short time period! Amazing to look at the total figures that include the items that aren’t really part of a standard budget (well at least not what I would consider a standard budget). I like to call many of these items rotating, non-recurring budget categories. You never really know what will fit into this bucket – sometimes it may be a fun expense like a trip, but other times it may be a not-so-fun expense like a roof repair. Either way, you need to be sure you’re building some extra fluff into your savings to allow for these items that invariably come up.

AJ: Ideally, this is a once-a-month exercise unless you’re experiencing months of rapid change. I love to see the trends in our spending by category and trying to identify what it was that caused significant variances. This year, we’ve exceeded our budget pretty significantly in order to put down roots in a new-to-us home that we plan to enjoy for many, many years. Some years we’ve taken more frequent vacations. Regardless, it’s powerful to be able to look back and track where we’ve been and where we’ve seen the greatest shifts in our spending.

As we look forward towards a more lean, less project-driven year of budgeting, we’ll look to reset specific budget areas to help compensate for our heavy year of spending. Reassessing the budget based on our historical trends helps give us a place to start from and get back to knowing that we’ve been able to work within those budgets previously.

Understand why you save
At times, you’re saving for a very specific purpose, like retirement, children’s education, a planned trip, a car, etc. Other times, you’re simply saving for those unknowns. It’s good to build up some extra buffer as you don’t always know the timing of some expenses. You (generally) have control over some of those larger purchases like a home renovation, but a broken faucet or malfunctioning product may push forward the timeline from what you had imagined.

Our primary budgeting plan for when we have those rotating, non-recurring expenses is to try as best we can to shuffle our month’s budget around to absorb as much of the cost. Then, for whatever we can’t make work in the existing month, we add it as a “recoup” for what our goal is for subsequent months. While it seems like there isn’t an end in sight sometimes, our goal is to really hunker down and chip away at some of this in 2015 now that we’re past a lot of our home renovation projects.

AJ: The hunkering down and chipping away piece is where my monthly tracking notebook becomes especially crucial. Meals are planned more meticulously, excess spending is trimmed and wants are considered more thoughtfully. We know that we all have our tipping points though, so using our past years’ histories helps our expectations stay more realistic which is completely necessary. When I’m on a mission to cut spending things have a tendency to get a bit extreme! :)

    When was the last time you examined your past spending?
    Did you learn anything eye-opening about your habits?
    Share with us what changes you had to make.

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Look at your past budgets. You may be amazed is copyrighted by TheSimpleMoneyBlog.com without consent to republish.

Some of the links in the post above may be affiliate links. This means if you click on the link and purchase the item, we will receive an affiliate commission. We feel strongly about only recommending products or services we use personally and/or believe will add value to you, our readers. Read more about our commitment to providing quality product recommendations.