Thanks for stopping by Apathy Ends! It’s Almost the end of February already and I am just getting our 2017 goals out here. The truth is, we are having a hard time setting realistic goals due to “The Baby Impact.” Basically there are so many unknowns in the near future, we don’t know if what we are doing is realistic or flat-out impossible.
I am a planner by nature, and it makes me a little anxious not knowing. Guess we will just have to embrace the unknown and adjust as we go.
Why Publish our Goals?
If you haven’t seen this done before, we publish our goals to hold our self accountable and periodically check in on our progress. 2016 was the best financial year we have ever had, and I don’t think we would see the same success without challenging ourselves to do better.
I highly recommend thinking about what you want to accomplish every year and THEN put a plan together to actually make it happen! The benefits have been impressive and it definitely helps with habit formation.
Breaking Down our Year by Quarter
Getting a little bit more granular this year due to the income and expense swings we are going to see throughout the next 1o months.
Quarter 1
Since we are already over half way through this quarter, I wont be overly ambitious. We are simply carrying our 2017 accomplishments until the baby comes.
Q1 Goals
- Continue saving over 39% of our after tax income
- Make double payments on my remaining Student Loan balance
- Since our Emergency Fund is fully stocked, the extra $125 every 2 weeks has been going toward my student loans
Quarter 2
Our due date is March 27th, if the baby comes around then Mrs. AE will spend the bulk of Q2 on maternity leave (12 weeks). At most, we will be getting 60% of her take home pay for the duration of her leave using a combination of short-term disability and Paid Time Off she has accrued.
Q2 Goals:
- Continue making a double Student Loan Payment
- Continue investing in my accounts at the same percentage:
- 401K (16% of income)
- Roth IRA ($110/Paycheck)
- Employee Stock Purchase Plan (5% of Income)
- Continue Brokerage account contribution ($50/Paycheck)
That means our savings rate will take a substantial hit this quarter. We will not be contributing to her 401K/Roth IRA or ESPP Plan for 3 months. Yikes! It stings a bit to think about stopping the contributions.
Putting a positive spin on this, we can take a 40% pay-cut on one of our incomes and our day-to-day life doesn’t have to change. So many benefits of a high savings rate!
Quarter 3 and 4
Mrs AE should return back to work by the start of Q3 and we are shooting to return to our previous saving level of 39%. This is going to be a substantial challenge, quick math says the baby will cost at least $1,200/month between insurance and daycare. EEEESSSSSH!
In addition to returning to our normal savings we want to pay off all of our hospital bills (most of this will be through Tax Free Income FSA Contributions).
Overall 2016 Goals
Some over-arching goals in random order that we want to accomplish:
Grow combined income by 6% – We killed it last year and went up 12%, it will be difficult to repeat that this year so we are adjusting down accordingly. This goal fuels everything else we try to do. Say NO to Lifestyle Inflation!
Debt Management – This will be on our list every year. Do not pay ANY interest on our credit card. Do not take on any additional debt (outside of 1 existing car payment, student loans and mortgage)
Develop a Passive Income Stream – This was a stretch goal last year, this site is attempt number 1 (even though it is not passive….) Continuing to look and research rentals is also on my to do list.
Explore Small Business Opportunities – We have talked about starting at small business for awhile now. Our goal is to explore a few possibilities and make a move forward decision for 2018.
Do 3 projects that increase our homes value (myself) – Another failure from last year, we have a lot of ideas and not enough time. I need to get the kitchen back-splash up ASAP! Its been on Mrs AE’s list since we moved in.
Anything I am missing? Any advice for creating goals with life changing events on the horizon? Do you use Financial Goals?
Nice work. I’m a big fan of setting lofty goals and it looks like you’ve done that with a baby on the way. Just goes to show the virtues of a high savings rate in that it gives you a lot of flexibility. Good luck!
Thanks GFY – Definitely going to be a challenging year and the high savings rate can solve a lot of problems
For us we started living as if he event had already arrived. This provided a cushion in case we assumed wrong. It also allowed us to see what is possible. Take into account first your pay on maternity leave for x months. That will be your first few months. After that ask local daycares about prices if you plan to go back to work (you should be doing so already as they may not have spots once the child is here). Live off the lower of those two. With the exception of diapers that should be the main costs for the first few years.
Thats a good tip, I am finishing up the financial aspect and will be putting it into a post over the next few weeks.
My sister is a stay at home mom and we are going to have her watch her for the first year, she gets some income – we get someone we trust for cheap. Win ~ Win
Daycare is so expensive! We decided my wife would stay home because daycare in MN where we live was $400/week!! One thing my wife is looking into is different side hustles so we have some extra cash. There are some neat things you can do by reviewing baby products and then reviewing them on social media 😀
Yea, we toured a few daycare around us in MN and saw $290 to $410 for centers, some of which weren’t even all that nice.
Will have to check that out! Sounds like an easy side hustle.
Babies sure have a way of changing things! Most people I speak with tend to tread water or even experience a loss in net worth during that first six months to a year, so it’s great that you’ll be able to continue investing at a strong clip.
I hope we don’t see a loss! It would take a pretty big market setback to have that happen (at least I think……..)
Child care is really expensive but choosing the right one is SO important. I would have paid our provider double what we did because it was like our kids having a second mom. Leaving them in good hands will make a huge difference when you walk out the door to go to work. And just remember – the backsplash is a want, not a need. Spending time together – the last month of just the two of you – is important too. Life will change forever in a few weeks 🙂
We got pretty lucky that my sister moved under 10 minutes away and is willing to watch her for half the price of a daycare center. She is even going to come to us a few days a week – SCORE!
Backsplash is definitely a want, and if we don’t get to it we wont be losing any sleep.
Nicely done laying out the yearly goals and checking in on them. I like the idea of the stretch goals too. I think the thing to keep in mind when adding to the family is flexibility. Don’t be afraid to change your goals up once baby arrives. You might be surprised at the impact to your time and energy.
Thanks Brian – I will not hesitate to make some changes – we both get our yearly raises April 1st, and if they are not what we are expecting they might change that day.
I have to say I’m pretty jealous of that maternity leave. I’m a contractor, so I get zilcho if I need to take leave. We won’t be having kids for at least another year, but it’s definitely something to think about.
Ouch, it hurts to pause retirement contributions, but it’s all about short-term survival in this case. Just gotta make do with your best. 🙂 I just found out Mr. Picky Pincher has an FSA through work so I’ll be interested to watch how you use yours! I heard you can pay for daycare through an FSA; is that true for your plan? It might be a good way to decrease your taxable income at least.
Maybe consider starting a 529 or other savings plan for your little one? It would be a good way to start them off on the right foot, but I know having a baby is quite the expense!
Ouch, no leave would be pretty rough. Our work pays for short term disability for 6 weeks, but the rest of it is stacked up PTO that she accrued over the last 14 months.
The FSA we are in is Health one that we can put 2,600/year towards, there is a Dependent Care FSA that has a max of 5K that can be used for Child Care.
“Putting a positive spin on this, we can take a 40% pay-cut on one of our incomes and our day-to-day life doesn’t have to change. ” THIS is huge! It’s great you’ve established the savings habits and gotten your financial ducks in a row before the baby comes. We did the opposite – and, let me tell you, it would have been so much easier if we had done it before.
I’m looking forward to following your journey into parenthood! So exciting! 🙂
It is HUGE! It should take some stress off and let us focus – hopefully we can get back to our ultra saving sooner than later.
Thanks for the comment!
I got a goal for you. How about raise the savings rate from 39% to an even 40%? You can do it! 😉
I like the home improvement goal. I’m working on landscaping my yard now. Very exciting!!
Sam
Maybe if we can kick ass on some side hustles this year its in the cards!
I like doing home improvement projects, when there is time
Thanks Sam
My household has also been recruiting a new family member, who is currently baking in the oven and will be joining us in July, so we’re very much in the same boat as you in terms of uncertainty. I’ve probably been more moderate in terms of my own goals, as I’m shooting for a (doable) %-increase of my net worth, but it’ll be interesting to see how it all ends up. No day care cost for the first 15 months for us though, because of the generous m/paternity subsidies in our country, so that helps.
Glad that someone is blazing a trail just ahead, though. I’ll be following with interest 😉
That is an awesome! 15 months – super jealous.
I will post my findings whenever I can
Planning for post baby is so tricky. My only piece of advice is to interview and try to secure day care spots before the baby is born. It can be a long and stressful experience and it’s best not to do that while post pregnancy hormones/sleep deprivation are running high. And to find a back up. I had an amazing nanny with our fist who ended up leaving for a family emergency for 10 weeks! That was crazy stressful.
Thankfully we are set on daycare with my younger sister! That sounds super stressful, hopefully we can count on her for at least a year.
Oh man, a baby would be a huge monkey wrench in my plans…I can’t even afford myself right now, let alone another human being! lol
My husband isn’t too keen on the idea of having kids for some reason (he is a grumpy old man sometimes), but I always thought that if I did, I’d want to move to Finland. They seem way more supportive of families over there, with plenty of paid time off and good schools. Hell, they even send you a welcome kit for your baby full of all the essentials you need while they’re young. Of course, they do pay higher taxes, but it seems like it works out and they have higher life satisfaction over there…
Guess I’ll just stay here and keep my nose to the grindstone though!
haha – we were patient on the kid front until we were financially secure and could afford it, but if it came down to it I bet you could figure it out!
I hope the US workforce demands change as time goes on, life is more important than work
I’ve been through this three times – you got this! I’m with Amanda that this is a perfect example of the benefit of a high savings rate. You can take a substantial decrease to your income temporarily, and incur increased expenses, without changing your lifestyle if you need. This is a huge benefit many people living paycheck-to-paycheck never experience. Best of luck!
Congrats on the little one! Yes kids are expensive, but I agree with Amanda and Liz. Having a high savings rate helps so much as it did in our case when we had our little guy. At least you’ll be able to continue making contributions to your retirement plans/accounts while also paying down your loans. That’s huge.
P.S. If you and your wife could have your little one on March 24 that would be great. Cool people have birthdays on March 24. 🙂
Congrats on the baby! We had our third (and last) last year and it was really hard to project the implications of it. And this was our third go-round! It’s kind of like starting a blog. You just learn as you go! 🙂
We’ve just welcomed baby # 2, and with the first one only 20 months old my household is spending more than ever on diapers! That is without question are biggest cost right now!
But on the other hand, life is about more than just our dollars and cents, and having a little person (or two) around is the most amazing, challenging, frustrating, excruciating, wonderful experience anyone could wish for!
All the best!
Babies are expensive! I am sure you will do just fine despite the reduced savings rate. Once you get into the swing of things with the new baby, everything will fall into place. 🙂
Congratulations on being in excellent shape! How fortunate that your sister will be available for the first year. Having that level of trust will make it so much easier for Mrs. AE to go back to work without anxiety. Meanwhile, that small break in her investments will be just a tiny blip on the screen.
Wow, these are some really detailed plans! For me personally, I find that I don’t do well to an overly detailed plan. I need some wiggle room as I chase my goals. But I’m definitely exciting for the baby that’s on the way and I hope to see you passive income stream goals!
“Do not pay ANY interest on our credit card”
I think this one should be a pre-requisite for many people. Credit card interest rates are so high. It doesn’t make any sense to pay those. I pay my CC in full each time and I don’t even know what my interest rate is because I never let the CC companies charge me. I use ny CC basically to get points to periodically get cash/credit back to my account. My motto is if I can’t pay it off, I shouldn’t have made the underlying purchase in the first place.
Good luck with your 2017 goals!
I definitely think it’s a good idea to plan out financial goals each year. I also posted mine on the blog in late February.
That said, I see a few similarities in our goals. I’m still working on my student loan and am making double payments each month. Also, I am aiming to max out my employer stock sharing plan, which will be 3% of my salary. Additionally, I am trying to save a fixed savings rate. Although, since I am still getting back on track after the year off, I only planned to save minimum 10%. However, I anticipate that it will end up much higher. Good luck with saving 39%! That would be incredible. Have a great week 🙂
You’re in such a great position–congrats!
As you know we don’t have kids, but it seems as though most new parents don’t travel or go out to eat much, so you’ll see some savings there. You might also save by not wanting to have nice things–they’ll just be ruined anyway. Just ask my cousin whose kids used to hang from their teeth from her formerly-gorgeous dining room table… It now has bite marks all the way around the edges!
Bite marks on a table – this is not the first I have heard of this! Kids are crazy!
Exploring small business opportunities will really help you a lot in the coming future. Don’t fall for big fish of the ocean; it’s better to run ten successful businesses rather than a big failing business. Debt management is very much required nowadays, without it, you’ll definitely face a lot of problems. Set the financial goals, prepare a list, start saving smartly and finally work on your goals. That’s it, this is how you going to achieve your goals, and soon you’ll achieve financial freedom.
Having to embrace the unknown because of baby – we couldn’t be closer to the same page on that one!
Good idea to break down your goals into sections of the year, considering the financial restructuring whilst maternity leave is happening. Will you be taking any time off after the birth yourself? We have saved up Tristan’s annual leave so he can have a few weeks at home with me and the baby after birth.
Your little one is arriving so soon! Is your wife working right up until birth? She is a trooper if so.
Jasmin
Thanks, Jasmin!
Yea, she is working right up until the end then taking 3 months off. I am taking 2 weeks off right after birth and might work from home a few times a week to help out.
So happy for you two!!!!