Fiancial Goals for 2008

Overall Goals
[ ] Needs/Wants/Savings at 50/30/20%
[ ] Target Portfolio Goal $4.3 million
[ ] Target Annual Savings $13,200

These targets come from the books All Your Worth and The Complete Idiot's Guide to Getting Rich.

Investing:
[ ] DH's 401k at 10% (12% stretch goal)
[ ] Max out IRAs ($10k)
[ ] Non-retirement contribution $3k
[ ] Net worth increase by $40k
[ ] Portfolio return of 12%

We've recently increased DH's 401k from 6% to 10%. Once that's comfortable we'll try for 12%. His employer has a match all the way up to the max contribution ($15,500)!

Short-Term Goals:
[ ] Taxes due ($10k)
[ ] Will and Trust ($2000)
[ ] Overseas airfare to visit family ($4500)

(So far I have $9500 set aside for the taxes, and $1500 for the wills.)

To Do List:
[ ] update W-4 (federal and state)
[ ] update wills and trust
[ ] invest IRA rollover money
[ ] review life and disability insurance
[ ] earthquake/disaster box
[ ] move $40k from taxable account to 529 plan

Notes
To set up the Target Portfolio Goal, I used this calculator:

It's getting close to the end of the year, so I'm inclined to look at what I've done vs what I planned to do at the beginning of the year.

Here's the to-do list that I put in my profile:
[ ] update wills
[ ] invest IRA rollover money
[ ] stock basis into Quicken
[X] annual review with broker
[ ] review life and disability insurance
[X] review phone & cell phone plans
[ ] earthquake/disaster box
[X] replace Mvelopes software

As you can see, I have made very little progress on some very important items. I did review the phone and cell phone plans, and replaced Mvelopes with YNAB, but these items were arguably the least important on the list. I had the annual review with the broker in March, but didn't act on his suggestions. (I wanted to go over them privately with DH first, but life got busy...) We still need to update the wills, invest over $80k of money that is sitting in cash within our IRA's, and add life insurance on me.

Our home value has dropped between $25-$50k, according to www.zillow.com, putting it about $675 with the remodelling.

The biggest change this year is that I started working part-time in July. My gross for the six months was $24k, and I spent about $2k on the babysitter. It will be interesting to see what the effective tax rate (given the second-earner penalty) turns out to be on this money. Regardless, it's worth it to keep my skills current and preserve my future earning potential. It's amazing how much breathing room $2k a month gives to the budget (I've been setting aside 40% for the taxman.) At one point I was lying awake at night debating how to best squeeze $150 out of the budget, now I can make that in a few hours work. It's easier to fund vacations and the occasional splurge. We've increased DH's 401k contribution to 10% (his company gives a match!), and should also be able to fully fund our IRA's in 2008. (We probably won't qualify for ROTH IRA's anymore.) I just ran some numbers, and our new "All Your Worth" balance of needs/wants/savings should be about 49/33/18, which I'm pleased about. (I'm also enjoying the mental break. Caring for a toddler means you never get to concentrate for more that 5-10 minutes at a stretch!)

I haven't done a detailed analysis of our investments yet, but our net worth is still hovering around $1.05 M, despite the decline in home value.

I've just run some numbers through a tax forecaster spreadsheet that comes with YNAB Pro. Our federal withholding will hit 115% of last year's tax (as planned), but something got messed up with the state withholding and it's only 50% of last year's. I'll have to make an estimated payment in January and hope to minimize any penalities. Right now we expect to owe $10k. I've got $8k set aside, and so will devote my first few paychecks to the remainder. Obviously I haven't been tracking this as closely as I should -- it may be time to consider hiring an accountant. I've been trying to avoid paying quarterly estimated taxes by setting up the withholdings correctly, but it might be a good thing to do them to force me to review our investments and tax situation regularly.

My biggest disappointment for the year is that I don't feel any more able to look at a list of funds in Morningstar and decide which one to invest in. My self-education campaign ran out of steam around March or April. I'm getting to the point where it's at least as important to maximize my investments as it is to keep my spending in check.