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January 02, 2008


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I have a twelve step process to getting where I want to be financially that I created two years ago....I am currently through step 3, and should be done with sstep 4 by Feb....I resolve to be through step 6 by the end of 2008....the first 6 steps are...

1. Max the company matched 401k contribution (7% of My salary)

2. Remove any non-mortgage debt with interest rate over the prime rate minus one percentage point (currently 6.25%)

3. Create “emergency fund” with balance high enough to cover the property taxes and one year of car insurance (currently approximately $5000)

4. Remove any non-mortgage debt with interest rate higher than what is earned in the “emergency fund” (This rate is variable, but is currently 4.1%. The debt amount in this category is currently about $8500)

5. Raise balance of the “emergency fund” to be equivalent to 4 months worth of expenses (about $10,000 currently)

6. Contribute $50/month to children’s college fund

In general, we're doing well in terms of "the usual" money goals. But we do have some challenges:

1. Find a good financial adviser. We've got enough net worth that I want to have things at least reviewed by someone who has a clue. The challenges here: I don't trust slick "90 day wonder" types who want to sell me a bunch of insurance and other junk, and our aggregate portfolio isn't quite at (but not far from) the $1M minimum that "wealth managers" require.

2. Find a good tax planner. All the CPAs we've worked with are good at the usual filing-tax-form stuff, but their heads explode if you ask them questions about tax planning and investing around taxes. This is probably related to 1; annoyingly, it's the sort of thing that "wealth managers" do.

3. Beef up our passive investments. We have some, but are looking for more, and would like to get to the point where income from "capital" (as opposed to work/labor) is enough to pay our monthly expenses.

I would definitely say that this is location specific. 11 percent looking to buy real estate in California would be extremely large and will not help in someone's financial future. However in other states, there may be some good deals to be found. I have three major things for the new year:

1. Max out the 401K

2. Look into adding 20 to 25 percent into stable currencies outside the dollar and commodities

3. Look for opportunities to leverage cheap debt - currently 10 year is 3.9 percent

There should be good opportunities for people looking to consolidate debt if the Fed keeps chopping rates lower. Although it may cause for people to go into further in debt (and this is what the Fed wants given the current state of the economy).

This year, I have three goals, two financial, one fitness.

1. Earn at least $2,000 from my online endeavors. T
2. Get to $25,000 in my “early retirement” account.
3. Run the Nike’s Women’s Half Marathon.

Foobarista - Re: #2, if you're in the St. Louis area, give me a call. We do this type of planning and tax planning in general all the time.

Our financial goals for this year:

1) payoff the wife's car (only $1,500 left, so that will be done by end of Feb at the latest)

2) payoff the balance of her student loans (only about $500 left)

3) cut back on eating out on weekends and trips to Target - 2 things that seem to swallow cash around our house

4) triple our savings account (at $12k now) so we can have 20% to put down on a new home in 2009.

5) make strides at work to reach "partner" status (aka greater income potential)

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