New Way of Looking at a Goal

So over the last week or so I've gotten really excited about a new strategy that I can use to reach my ultimate financial goal: to payoff the mortgage. When I first got my mortgage I thought I would pre-pay in order to shave years and interest off the mortgage. So I set up auto pre-pay of $500 a month, which essentially doubles my principal payment to about $1,000 a month. However, I also thought I would pre-pay a big lump sum each January post-bonus/end of year. The more I read and talked to my Learnvest adviser, the more I realized that pre-paying the mortgage is not actually the best strategy.  Instead, I should invest the money. I like this idea because it gives me liquidity in case of an emergency. That said, I hadn't found a way to track how much I would need to save over how long a time period to reach this goal. Then this week on Mint.com I was like "wow, what if I just create a mortgage-payoff goal" which I did. I input my mortgage balance as the amount of $ I want to save for the goal and then I linked all of my non-retirement savings accounts to the goal. I have a balance of about $200K in those accounts. I've got about $329K to payoff on the mortgage. Hence I need to save about $129 to pay this off. 

Then today I started thinking about the power of compounding, because this money is invested. Some in CDs, but some in my brokerage account. Sooooo this Mint goal isn't taking into account investment gains/interest. So with my planned monthly contributions and any investment gains/interest, I should be able to reach my goal a lot more quickly. I have a goal of 10 years right now, but when I play with savings calculators, I can possibly reach this goal in 5 years if I earn returns of 5%. Which is a little aggressive because some of this money is in CDs paying 2%.
Anyway, I just feel much more energized about my savings outside of retirement now, because I am saving for a purpose and each month I'll be able to see, thanks to Mint.com, exactly how much closer I am to reaching my goal.

Q2 Goal

So reading Budgets Are Sexy today inspired me to set out a goal or challenge for myself. I've decided that I'd like to save $25K by the end of Q2 (end of June). It seems like an aggressive but a doable goal. It's nice to put it down in writing and have a reason to save.

I've been pretty good at the little things this month. Cooking more at home. Stopping my aggressive Oren's habit. But not so good at the big things. A Spanish class. A deposit for a trip in April. Oy vey. I have to get better at cutting out the big things too!

NetworthIQ

I added the handy NetworthIQ widget. Note: I am lazy and just threw all my stocks and bonds into the stocks line item.

So, how am I doing? Big hit late last year due to stock market, but then I got my bonus and paid off my Sallie Mae debt. The leftover student loan debt is interest free on one of my mother's credit cards. I could pay it off, but why bother? I'm earning interest on the money in the bank.

Same principle applies for my credit card debt. Not only am I earning 4% interest on my cash, but I get 2% cash back on the card. Total return from credit card spending = 6%. I know everyone says credit card arbitrage is risky, etc. but I think it's awesome. If I could get a balance transfer check without the 3% I would move the debt again when my 0% teaser interest rate is up in October.

My ultimate goal is to have $100,000 in cash. It's such a nice neat number. As of the end of June, I've got about $57,000. Almost 60% of the way to my goal. In a perfect world, I'd have this much by January 2010, but for those who don't know what happens when you plan for something, consider a line from one of my favorite poems:

"The best-laid schemes o' mice an 'men
Gang aft agley,
An'lea'e us nought but grief an' pain,
For promis'd joy!