Thursday, May 5, 2016

Longer term financial planning

We're at that time of year where I get all anxious about our financial planning beyond just the month to month, or even looking ahead to the end of the year. I like to have financial plans that reconcile our biggest priorities & put them on a timeline. Of course, it's super hard to predict & build plans when the future is ever changing.

Here's how I've been roughly thinking about our financial priorities. Note that this assumes we'll continue to have zero non-mortgage debt, will maintain our existing retirement contributions (and will continue to grow to the IRS max each year, etc).

  • 2016-2017
    • Top priority - saving for a house in California. We're still sketching out what this will take, how much of a down payment we will need/want, etc. 
    • Put *some* money in the boys college accounts. Maybe in the neighborhood of $2K, each year. 
    • Travel. Continue with our existing travel budget & priorities.
  • 2017 (April-September?)
    • Top priority - buy a house. Our lease is over at the end of next August.
    • Travel. Continue with our existing travel budget & priorities.

    • 2017 (October-December)
      • Rebuild savings, any repairs or furnishings for house, etc.
    • 2018-2027
      • Top priority - save $1,000/month for the boys college. This will put us roughly on schedule to have 85-90% funded for both. They will be responsible to work & save for the rest. 
      • We will pay down all of our mortgages, on schedule. No plans to make the payoffs a #1 priority. For now.
      • Travel. Continue with our existing travel budget & priorities.
    • 2028+ (I will be 52, M will be 61)
      • Pay off all mortgages
      • Increase travel budget
      • Retire - this will likely still mean working for enjoyment & flexible money, but not with the same requirements as we have now. It may also mean that we relocate to somewhere a lot more affordable. 
    Obviously, my work plans will greatly impact our ability to do much of the above. I remain in a holding pattern. I know I will work at least until the summer of 2017. And, I get a large bonus in January of 2018 (assuming my employer continues this). I'm considering either January of 2018 or June of 2018 as my potential end dates. From there, I would look for more flexible work options, and will know exactly how much I'd need to earn to pay for our house, travel, college savings, etc.

    What about you? Do you get anxious without a plan, even if it's rough? Do you enjoy running the numbers & seeing how things play out with your future? What are the big milestones you're currently tracking? We're in the "under 10 years" phase, where we have 9 more years until Nick is out of school, and then our world changes quite a bit. We will be paying for college (hopefully will have it funded by then), but won't have kids in the house & will have quite a bit of freedom to move around, explore new places, split our time between Washington, California, Hawaii? Tell me about your plans!


    1. I seriously LOVE running the numbers and looking at the options - to the point of frustration to my husband. At this point, we plan on staying here for at least 6 years or until the last one goes off to college. Then we may rent an apartment closer to DH's work and travel as much as we can. We have no idea where we want to live, so part of the travel plan includes looking for a place. We know for certain, we don't want to live here in Houston. Other than paying for college currently and in the future, I am not tracking anything. It all hinges on the kids moving out.

      1. Ha. I rarely share these things with my husband (he knows, but doesn't want to see the numbers all the time, rather). I also love it! :-)

    2. I actually don't get anxious at all without a plan. I save so I have options bit I don't really have everything all mapped out. I like our current location and we built this house with retirement in mind. However, if everything changed tomorrow, I'd be happy to roll with the changes (as long as I have my family).

      I'm curious about something. What if your kids don't go to college? Or go one semester and decide they hate it? It sounds like all their savings are in 529 plans.

      1. You are much more chill than me. ;-)

        I have nephews that are very close in age to my kids. If for whatever reason my boys decided college wasn't for them, I'd very much encourage them to try again (another college, a semester off, whatever), but would transfer the funds to my nephews, as needed. My sister won't be able to save much/any for them, so it will definitely still go to use in our family.

    3. I've a passion for anything numerical, there is something strangely fascinating about them. We have 96 monthly payments left until the wife and I are completely debt free. Our plans are to reducing our working hours by 50 percent and go on vacation Once a month, our dream is to visit somewhere new each month.

      Henry Hansen @ Ethica Private Wealth Specialists