DIY Financial Plan: Step 1
As I learned, when I interviewed financial planners and in my research afterward, the steps of a financial plan are standardized and I’m going through all of them here.
The first step is to layout clear financial goals. This will shape our plan and guide how we direct our money to work toward making our goals our reality.
Examples of financial goals could be things like paying off debt, saving for a down payment on a home, retirement, or paying for kids college.
My goals are:
1. To pay off my home with Mr. Cabbage as quickly as possible. It is already 33% paid off after just one year (we closed in late July 2019). Since then we have thrown large amounts of money toward our principal payments. In May we refinanced from a 4% on a 30 year mortgage, to a 20 year at 3.15% fixed interest rate. Our plan is to payoff our loan in under eight years from now, which will be 12 years early, which will mean we will be saving so much in interest and we will be entirely debt free.
2. I have always told myself I could retire by age 52 from my current daytime gig. I don’t know where I picked 52 from, but I felt it would give me enough mobile free time to enjoy the world by traveling, doing hobbies, and living freely. That’s an extra decade of freedom from most retirees. It doesn’t mean I won’t work, but that I have more freedom to choose what I do. I want to be available to leave the DC area if Mr. Cabbage and I want to and travel, work remotely, enjoy our time while we have it. For me the coronavirus telework opportunity has really given me a taste of the free life and I love it!
One big goal for me is to determine a FIRE retirement number. I track my net worth but over the course of this series, I hope to have done enough research to be comfortable coming up with a FIRE number to work toward.
Tell me: what’s your number one financial goal?