After giving an update yesterday on my 2011 financial resolutions, I thought I'd follow it up by telling you what I'm planning for 2012. Here goes:
- Expand my gap if possible. I already have a pretty good gap between what I make and what I spend, but there may be room for improvement. I at least need to find out. I'll go through a complete review of my spending on Quicken this year and see if there's any fat that can be cut.
- Review my investments. I was supposed to do this last year, but didn't. I have a couple accounts that need to be closed and a couple moved around. I also need to select a bank (probably online) to keep my "emergency fund phase 2" money (money I still need to be safe and accessible, but not as close as my credit union) to try and earn a bit more on the cash I have set aside.
- Make major purchases. Some we're looking at: trip to Caribbean, new furniture for the living room, another potential trip, a new bed, and some advanced landscaping in our back yard (may be needed with some of our trees dying.)
- Update retirement plan. I developed a financial retirement plan last year. I need to update it based on 2011 performance (where my net worth ended versus where it should have ended to be on track) and make needed adjustments.
- Consolidate charities. If it kills me, I want to limit the charities I give to to 10 or so. I'd like to focus more money on fewer organizations to increase my impact.
- Invest in my career. I want to learn a few new skills and expand my network. After all, my career is my biggest financial asset and I want to do all I can to maximize it.
- Update my will. It's been a few years since my last update and I need to have my will reviewed to be sure it's still what we want to have happen in case we pass away.
Looks like my 2012 plans are similar to what I did/wanted to do in 2011. I guess that's to be expected since my finances require very little work/changes at this stage of my life.
http://www.freemoneyfinance.com/2010/03/making-the-most-of-your-most-valuable-financial-asset.html
Look forward to hearing how things go. A major purchase seems completely justified given your fiscal responsibility. I have a huge oak tree in our backyard that's pretty much dead so I have to get that taken out this year. Should be fun!
Posted by: Money Beagle | January 03, 2012 at 01:57 PM
GREAT resolutions!! I love that you are still committed to expanding your “gap” even when you have reached beyond millionaire status; that is really a testimate of the habits associated with the millionaire next door. I am excited for you and your family taking a cruise vacation – you have really earned the break! Good reminder to look at the will, I think I will add that to my list as well. I am curious if you are still fully invested in index funds? Do you mind sharing what funds? Now that you have a higher net worth do you plan on investing some of your taxable investments in single stocks or anything else with more risk/reward proposition? Just curious. You should definitely look into starting a LinkedIn account if you would like some quick hits for expanding your network. One of my favorite features on LinkedIn is an option for the service to look at your email addresses to find people for you to connect to. Then it starts suggesting people who are connected to people you are already connected to. Very powerful networking tool. I am just going to be very transparent in saying I have had many job opportunities initiated/facilitated through the site. Worth looking into considering you likely already have a large network that could expand even further with the tool.
I paid off all my debt in 2011. For 2012 I have automated fully funding mine and my wife’s ROTH IRAs with Vanguard. I think it starts this week taking out about $200 each week to fund both of the ROTHs. I also want to have a will drawn up. Lastly I plan on making another real estate purchase.
Cheers and God’s best for the New Year FMF!!!
Posted by: Nate | January 03, 2012 at 09:00 PM
Nate --
Here's where I have the majority of my investments:
http://www.freemoneyfinance.com/2008/11/how-i-easily-improved-my-investment-returns-using-vanguard-admiral-shares.html
Posted by: FMF | January 04, 2012 at 07:47 AM
@FMF, Nate: For some or all of the Vanguard funds, the ETFs have equal or lower expenses than the Admiral share class, and can be bought with zero commission/fee in a Vanguard brokerage. Also no requirement to have a $50,000 balance or wait 10 years.
In taxable accounts, Vanguard will also convert mutual funds to ETFs in a manner that does not generate capital gains tax. (The ETF an be treated as just another share class conversion.)
Not sure if ETFs would work for $200 increments such as Nate's, but they work great for larger amounts.
Posted by: Mark | January 04, 2012 at 01:05 PM
Mark --
For the funds I've linked to above, the minimums are $10k and the expense ratios for Admiral shares and ETFs are identical except for the International Fund -- where the Admiral shares are cheaper.
Posted by: FMF | January 04, 2012 at 01:14 PM
@Mark: thanks for the comment!! Yes I actually do all of my investing in Vanguard’s no-commission ETFs. I do not own any of their mutual funds – just the corresponding ETFs. You can invest even in 1 share – there are still times when I transfer $40 over to Vanguard and purchase a share right away (if I skipped an expensive meal out or something etc.). I have done this for a while in order to solidify the behavior. Historically I have done my investing in 401Ks but this year my wife and I will max out both ROTH IRAs and we will be investing in the ETFs.
One downside is that it can’t be fully automated. The money will be automatically transferred to my Vanguard money market account. But from there I still must go online and click to make the ETF purchase.
I didn’t even notice that the ETFs had a lower expense – nice tip thanks Mark!!
Posted by: Nate | January 04, 2012 at 01:17 PM