Once again, it’s time for a monthly review of my finances. I generally break things down by evaluating my assets and my debts (which together make up my net worth), and then using these numbers, I attempt to set goals for the coming month. This is a useful exercise for everyone to do, simply so they can keep tabs on their overall assets and debts and make sure that they are consistently heading in the right direction. Let’s break it down.
After some careful deliberation, my wife and I made a decision in the middle of the month to focus heavily on debt repayment over building our assets, and as a result my debt took a major step downward this month because I paid off one of my outstanding student loans in its entirety. That’s right, we now have only my wife’s student loan, my one remaining student loan, and our home mortgage as debt.
Thus, last month’s goals didn’t really apply too much. My goals were centered around asset growth, which was mostly money to be put into savings while we made some challenging decisions about what to do next. Now that we’ve made those decisions, my asset growth was tiny, but my debts took a very large swoon.
Our next goal is to get rid of my wife’s student loan, and I’m going to be contributing some significant cash to that. I don’t include her student loan in my net worth calculation (we agreed that we’d individually be responsible for debts brought into the marriage), so I expect that over the next several months, my asset growth and debt reduction will remain relatively flaccid, but once that debt is gone, things will shoot off like a rocket.
Here are my goals for the coming month.
Asset growth of +0.25%. This goal will be accomplished by continued contributions to retirement and to various savings goals.
Debt reduction of 0.25%. I can largely accomplish this by making a mortgage payment, not charging up the credit cards, and making a student loan payment.
Paying off 10% of my wife’s student loan. Her loan is well north of $10,000, so this is actually the real tough goal for the month. Since I’ve made a pretty serious commitment to frugality this month, this is actually an achievable goal. In the following months, I’ll keep this as a goal and keep raising the percentage on it.