Defining My Financial New Year’s Resolutions – And Their Action Plans

A few days ago, I discussed why so many New Year’s resolutions fail: it comes down to excess resolutions and a lack of a realistic plan filled with milestones. With that in mind, I have defined three resolutions for the coming year, along with plans for being successful in following these resolution.

I resolve to give up fast food.
While I reduced my fast food eating in 2006, the convenience of it made it difficult to give up entirely. I’ve been trying out various methods for replacing the convenience of fast food in my lifestyle and I’ve hit on a variety of little things that work. I believe that using them in concert will eliminate the expense of fast food in my life.

The plan: The metric here is impossibly easy: did I eat fast food or not? If I’m ever tempted to eat, I’ll just turn away and do something else.

I resolve to buy a house with a minimal interest debt.
To do this, I need to consolidate a number of different investments, plus borrow some funds from my retirement account (you can take a loan from your retirement, then pay it back at a low interest rate). The goal is to maximize the down payment so I can minimize the overall interest rate.

The plan: I’m meeting with a financial planner next month to get all of my funds straight, then we will do our home shopping in the spring with a budget already in mind. It looks like we have a strong 20% down payment for our first home, which is a true blessing.

I resolve to double my investment in my Vanguard 500 aside from its earnings.
Just recently, I dove into my first mutual fund, the Vanguard 500. Right now, I’ve invested $3,600 of my own money in the fund. In the coming year, I plan on at least matching that amount. Plus, once I reach the $10K mark, I no longer have to pay the $2.50 quarterly maintenance fee, so I would like to cross that mark as early as possible.

The plan: $3,600 over 12 months means $300 per month. I’ve already set up an automatic investment plan for more than that amount ($600 a month, right now) so that later in the year (for example, around the time of my home purchase), I can reduce the automatic deduction.

So, what are your resolutions, and what is your plan for making them successful?

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  1. David in Vegas says:

    The interest on a home loan is tax deductable making it one of the better forms of debt you can take on because you can actually reduce your tax burden, while at the same time investing in a home. (I am not a tax professional, but have always heard this to be correct)

  2. phil says:

    David: yes mortgage interest is tax deductable so that means you’re getting about 30% of the interest you paid back (depending on your tax bracket) – however, the other 70% is still money you’re paying to a lender. Plus, if you can put 20% down that means you don’t have to pay PMI which is basically. PMI is money flushed down the toilet every month.

    Also, home prices in many areas are still falling so be careful depending on where you’re buying. Many analysts believe that prices may not bottom out for a year or two more and even then it could be several years before they return to their 2005 peak. (check out this article on SeekingAlpha: )
    It may actually make sense to continue to rent for a couple of years more and build up even more savings for the downpayment.

    Home price vs. average income is at historical highs. I recall when we bought our house back in 1990 that we paid about 1.25 X our annual household income. Today if we were to buy the same house it would be about 2.75 X our income.

  3. Kim says:

    My financial resolution or goal this year is to increase my contribution to my 401(k) to 15% of my gross pay! Like you, I also have automatic savings – which is how I built up an emergency fund (ing, orange). Now I am stopping that savings plan in favor of retirement savings. You can see what I am planning for the investment of those funds here:

    I like your fast food plan! I don’t usually eat fast food, but I happened to be eating burger king as I read your post, so I’m adding it to the list.

    good luck with those resolutions! Kim

  4. My plan is to eliminate my $7,000 credit card debt in 6-8 months.

    I plan to do this by living overall more frugally, setting up a budget based on the guidelines you’ve set out in one of your previous posts, eliminating as much eating out as I possibly can. I am also slowly adding to an emergency fund while putting every spare penny towards my debt.

    I’ve already begun consolidating my debt from two cards at 19% to one card at 12% and am looking at consolidating further with 6 month balance transfers at 0% and personal loans with less than 10% interest.

    I plan on taking a second job where I work one, maybe two days a week. All income from this job, without exception, goes to my debt.

    I plan on sorting through my CD and DVD collections to sell the chaff I don’t need.

    In short, I plan to do whatever is necessary to see this goal come to fruition as soon as I bloody can.

    And I’m doing most of it with your help. Either using your suggestions or just being inspired by blogs such as your, Get Rich Slowly, and Make Love Not Debt.

  5. rodgerlvu says:

    thanks. you are the most intelligent person i ever met…

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