Financial Goals

Lately DH and I have been giving quite a lot of thought to our financial situation. I've written previously that our goal is for DH to be able to work part time, and hopefully retire very early, but so far aside from dreaming, we've made very little effort to achieve this goal.

I've been reading many blogs lately about people who have begun to make moves towards changing their situation. People who are working to pay off their mortgages, and live life the way they want to instead of being ruled by their debts, and they are inspiring. I think we can do it too. No, it won't happen tomorrow. In fact, it will be years away. But we certainly can't start any sooner.

Our first goal is to finish paying off our credit card. We hope to have this done by the end of March. Until it's paid off, we're going to continue with our Nothing New policy as much as we are able to. I'm mending our sheets yet again because I don't want to have to buy a new set. (And I refuse to buy cheap ones, I have a particular set in mind, and am waiting until we have the SPARE cash to afford them.) We're attempting to intersperse our normally meat heavy meals with cheaper ones, like the scrambled eggs we had tonight, (Can't get any cheaper than that, eggs laid by our own chooks, on toast cooked here at home), fried rice, and pasta. The increasing amount of produce we're getting from our own garden, as well as making everything we can at home (from materials we already have where possible!), helps as well. Really, there is very little we will need to buy over the next few months. (Except the previously mentioned bookshelves and new lounge if they are available, though in reality they aren't needs, but wants.)

Once the credit card is paid off, our next step is to build up an emergency fund of $1000. As any budgeting gurus will tell you, if you lack an emergency fund, you will simply rack up your credit card again when the unexpected happens. We now have a second mortgage offset account (off our construction loan), where the emergency fund will be separate from our day to day money, while still offsetting the interest on our mortgage. We hope to have this done by the end of June.

After the initial emergency fund is secure, we will increase our payments on the home loan by $100 a fortnight. Not much, and should be easy to do without many changes to our current budget, but from the few calculations I've done, it should reduce the repayments on our home loan nearly in half, and save us scads of interest! While we're doing this, we will continue to add any extra money, bonus payments etc, into the emergency fund until it's at about $5000. Hopefully we should achieve this by the end of the year.

Then, all going well, any extra money we get will go straight into the home loan. If we can pay off this one loan (the smaller, and at a higher interest rate), it will halve our repayments, and would allow DH to work part time if he chooses, or allow us to pay off the second loan (on the land) in half the time.

In order to help us keep track of our goals and progress, I've set up a budget in Microsoft Money (which we already had!) We've used this with great success previously, only falling behind when DD was little, and we couldn't find the time to keep it updated. Hopefully it will work just as well for us this time!