ROMT’s 2019 Financial Resolutions
Back on New Year’s Day, I reviewed our financial resolutions for 2018, and, more importantly, reported on how we did keeping them last year.
Overall, I think we earned a grade of a B on the nine financial resolutions we published a year ago, but the variation in our grades on each individual line item was pretty extreme. We earned three A+ grades (maxing out our 401(k) contribution, contributing enough to our children’s 529 plans to maximize state tax benefits, and choosing not to invest in Bitcoin last January), but I think I also earned a D on my goal to blog more consistently at Retiring On My Terms.
Hopefully a year from now our grades for these 2019 financial resolutions will be both higher, and more consistent, than what we achieved last year!
Max out our 401(k) contribution
When I first got out of college, my goal was to contribute as much as I could to my 401(k) account in an effort to maximize the matching funds offered by my employer. I tried to bump up my contribution as much as possible from year to year, with varying levels of success.
Now that we are on sounder financial footing and not living paycheck to paycheck, I’ve been able to max out my contribution for the past few years, and my goal is to do the same in 2019. The IRS limit increased to $19,000 this year, so if we can hit this goal, we’ll save over $25,000 for retirement given my company’s 33% match. That will go a long way towards ensuring our net worth will be higher a year from now than it is today, even if the stock market remains volatile.
Make sure our money is working as hard as we are
Writing and researching for this blog has helped me focus more attention on our personal finances. After I researched bank products in 2017 we moved a lot of our savings from our credit union and local bank to online certificates of deposit (CDs), which increased the amount of interest we were earning materially. As those CDs continue maturing and we earn additional money, I want to remain diligent in making sure we’re maximizing what we earn on our savings, and continue investing excess funds into stocks, bonds, and mutual funds.
Ramp up contributions to our children’s 529 plans
The funding of our children’s 529 education accounts is one of the three key metrics we are tracking to determine when we can declare ourselves financially independent. As of December 31, 2018, we were 49.2% of the way to our goal, and I’m hopeful we can get to 55% of our target by mid-year. To get there, we’ll need the stock market to perform well (which it has so far early in 2019 after a down year in 2018), as well as make additional elective contributions. Over the course of the year, I want to make sure we contribute enough to maximize the state tax credits we can claim when we file our 2019 taxes. A second – and more ambitious – goal is to contribute 10% of the amount we think we’ll eventually need in those accounts this year.
Blog more consistently at Retiring On My Terms
As I mentioned at the outset, this is a resolution I struggled with last year. I started Retiring On My Terms in May 2017. Blogging is more work than I anticipated, and frequently tough for me to balance with work and family life. Consequently, my performance over the 20 months ROMT has been live has been quite inconsistent.
Last year I posted on the site just 38 times, versus a goal of 60 posts. For this year, I’d like to write a minimum of 50 posts, which would represent an increase of more than 30% from what I did in 2018. I’d also like to ramp up my admittedly meager Twitter game, by being more active on the platform and reaching 1,500 followers (up from 917 today). I want to engage with other blogger’s posts about financial independence and early retirement more frequently than I have over the past year, by responding to at least one post a week in a meaningful fashion. And finally, I’d like at least one article posted on Retiring On My Terms to be featured on Rockstar Finance this year.
Clearly, I have a lot of work to do on this resolution!
Continue increasing our passive income
Building up enough passive income to support our lifestyle is our “stretch goal” on our path to FIRE. As of December 31, we were just 33.9% of the way to being able to finance our anticipated lifestyle solely through passive income. Unless we hit the lottery, there is no way we’ll be able to reach this goal before turning 50. Quite honestly, I think it would be very tough to do before turning 55. But more passive income is better than less passive income, so I want to make sure we keep investing in higher yielding CDs, good dividend stocks, and solid corporate bonds over the next twelve months to ensure our passive income continues moving in the right direction.
Proactively cut unnecessary expenditures
Subscription services have nasty little habits of renewing automatically and increasing their prices on a regular basis. I’ve written in the past about how much money can be saved by making a few simple phone calls, and we managed to cut out a few additional expenses last year, but I want to make sure we remain vigilant around unnecessary expenses in 2019.
The discounted rate we received from the cable company a couple years ago when I threatened to cut the cord will expire shortly, so that expense is top of mind right now. We’re still more than willing to cut the cord on cable television, so my assumption is we’ll be able to save some money either by doing that or getting a better rate from Comcast when our discounted rate expires. Other regular expenditures I’m planning on taking a closer look at this year include our auto and homeowners insurance, waste collection, and some other subscription services.
What about you? What are your financial resolutions for 2019?