the working room

Financial Planning My Way
Friday, June 27, 2008

This is the initial workings for my lifelong goal of financial stability. I see personal finances as a four legged stool: retirement, real estate, investments, and cash. I strive for simplicity. These are goals for starting balances, the future yields would definitely be higher.

1. Retirement

IRA, Roth (IRA), and Whatever Else the Government Will Think Up: Stop funding accounts once $100,000 is reached. I don't bother with all those online calculators and projections. They are unrealistic, crazy, and make people silly. The money is to be left alone until retirement age! Mutual funds range from international / foreign markets, fast growing medium-sized organizations to large, dividend paying companies.
Pensions: Future estimates are that it will be less than $100 a month. Not enough to feed a cat in 30 years.

2. Real estate

Pay off mortgage(s): own the home / property outright. Current mortgage is scheduled for 30 years of payments. Goal is to pay off this debt in 15-20 years.
It doesn't matter if I move tomorrow. I will look for the same housing costs, in order to have the same payoff period remaining on the new house and mortgage.

3. Investments

Rental Property: I wanted to buy rental property years ago, not the single dweller homes, but modest-sized apartment complexes. I don't know if I have the temperament for this activity. My objective would be 15 year mortgage payment plans.
Mutual Funds: These accounts are gone. I have to start over for my stool to have all of its legs. I will begin with $2,500 per account, or re-invest in same every year: that's roughly $210 per month. These accounts are where all the monies will be.
Bonds: I wouldn't necessarily call bonds an investment, but they satisfy my conservative nature. I want municipal and corporate bonds, with the grand total of all not exceeding $100,000. If I was retired, I would definitely look at government bonds.

4. Cash

Checking: a general bank account, nothing fancy. There are people who have all sorts of complicated schemes where they shift funds around for a tiny difference in return. I don't knock them for it. I just look at it as a place to park the money before the bills are paid. I require only two months of expenses here. If I need more funds, then the other accounts get pulled.
Envelope Stash: have enough to keep me from going to the ATM every week. This is what people did in the old days. Keep the money in an envelope and take what is needed for the week. It helps keep spending in check: take only a debit card for emergencies.

There you have it. It's not perfect, but something I aim for.

Labels: bonds, investments, real estate, retirement, social security