Wednesday, May 21, 2008

2008 Goals Status Update

I was originally going to save this one for a few weeks from now, but that didn't make any sense to me after some consideration. I'm a blogger, dammit! I should be communicating and schitt.

The biggest goal update is that I am now one transfer of $1305 away to my emergency fund account. With that, and the interest from June, I will solidly be over my $20,000 target for 2008! Woo hoo! Its about bloody friggin' time, and it has been a long slog to get here. I won't recount the financial mistakes made along the way. (That's what the blog is for, so you can search back through previous posts and read about them at your leisure!) However, it will feel good to have that cushion in place.

Once this is built, I'm going to cut back the rate of Direct Deposit into the account significantly. Why? Because of this. We had this conversation a few months ago, and I said that there was a method to my madness. Using the majority of the funds I am no longer putting into my emergency account, I will get to work on retiring my only critical debt - credit card debt. I've racked this up over the last year, spending on trips and others, mostly in an effort to make myself feel better about my relationship fuckup last year. There were other legitimate uses of the card too, such as charitable contributions, and I love putting my rent on it. That builds up points sooo quickly, or at least it will once the debt is paid. I'm also tired of AmEx making so much on me. I have nothing against profit motive, but its time for me to stop being the profit center.

At the same time, I'm planning to open a new account, which will be Direct Deposited into at a rate of about $150 per pay period. (The total savings Direct Deposit will be $300, leaving over $500 per month for debt repayment. I put away close to 20% of my net pay every month.) Now that I think about this a bit more, though, it seems I am violating one of my cardinal saving rules, which is to consolidate balances in a single FDIC insured account if the balance is < $100,000. Hmmm. Maybe I won't open that new account after all, which is fine. I just did not want to mix savings for spending with my emergency savings. However, having only 1 account to manage is a plus, and I'll get the benefit of a heftier balance which will accrue interest more quickly. We'll see. I'm sure paying down that card will dramatically impact my credit score also, and for the better. While I'm fairly certain I'm high into the 700s (750 - 800 last I checked), its time to stop fuggin' around and get serious about my debt management. I've paid off over $30,000 in the past, so this will be a cake walk in comparison as the debt is less than half that amount. (At that time, I lived in southern California, slept on my girlfriend's sofa, commuted 80 miles one way to work, and made significantly less income with higher overall expenses.) I'm looking forward to seeing my net worth climb from the debt reduction, I have to admit.

So in a few weeks, I'll be able to say that I have nailed 2 of my goals for the year, and we're not even 50% done. Damn that feels good! I would say, to quote the great Gordon Gekko, "It was better than sex" but I'd be lying my ass off.

Until next time peeps...


Greg said...

Great to read the update and congratulations on being so close to some of your '08 goals so quickly but I was just wondering (and this is something you mentioned in your post), why have so many accounts? Of my moneys that 'the man' knows about, I basically have one checking account where I transfer money into when I need it... It's true that I don't have an emergency fund like you but I suppose I don't really understand why you wouldn't put all your savings (including emergency saving) into one interest generating account?

Khyron said...

Well, that's what I was saying.

If HSBC had some of the snazzier features of ING or Emigrant Direct, I could create sub-accounts. However, I haven't figured out how to do that (if it even exists).

The reason for multiple accounts is segregation. It just works better for me like that, knowing that this account is dedicated to a specific purpose.

Right now, I DD funds to the emergency account (skipping the auto transfer step, thus removing complexity). The remainder of the check goes into my primary checking, and I link that account to everything else. Everything else is a pretty small set of accounts, currently. So we do something similar from an account management perspective, it sounds like.