Astute readers will notice that, as of the end of last month, Lisa and I reached our Liquid Savings Goal of $15,000. For the first time, that little green “Liquid Savings” bar chart on the right sidebar shows progress of one hundred percent.
Though we’ve not strictly followed Dave Ramsey’s Baby Steps plan, we’re now up-and-over Baby Step 3:
Create a full-fledged Emergency Fund containing 3 to 6 months’ worth of expenses.
The $15k gives us about four months’ worth of living expenses. With no debt other than our mortgage, and four-plus months’ worth of cash in the bank, I would like to take this opportunity to channel the incomparable James Brown and state that, yes, truly, I feel good.
What’s Next?
You’ll forgive me, I hope, for not yet knowing exactly what goal I wish to target next. If I turn to Dave Ramsey again, I see that Baby Step 4 suggests:
Direct 15% of your annual pre-tax income into your retirement plans. Utilize tax-advantaged accounts such as 401ks and Roth IRAs, if eligible.
While notching up my 401(k) contributions to 15 percent of income would be easy to pull off, effort-wise, I have over the last 5-10 years grown quite skeptical of the 401(k) setup overall. The high fees of my company’s particular plan are bad enough. But beyond that — call me crazy, if you like — I’m also way reluctant to start pouring more cash than I already do (enough to get the full employer match) into a tax-deferred investment vehicle which my spend-itself-silly government so obviously eyes as a future income source.
I’d favor the Roth IRA route, for sure. But even then, one has to wonder just how exactly the idea of allowing us “rich” Roth investors to withdraw investment gains tax free is going to play out in the future. (My opinion? Not well.)
So … as I said, I’m undecided where to focus efforts next. In fact, when it comes to savings, there are a multitude of items we’ll need to consider:
- My personal vehicle is now 15 years old. My 1995 Nissan truck will have to be replaced at some point. I don’t want to borrow for my next truck, if I can help it. It’s likely time to start making monthly Freedom Account payments to myself for this future expense.
- Our house will need a new roof soon. Ah yes, the old house-maintenance big-ticket expenses. In this realm, new siding and windows would be beneficial, as well. And you should see our carpet. (Actually, no, you shouldn’t. Bleh.)
- Vacations. Good ones. When I was a kid, my family never took “big” vacations. Sure, we’d make yearly trips to Iowa to visit relatives, but that was about it. There were things I wanted to see as a kid, but never did, and there are even more things I want to see now with my family: national parks, Disneyland, Gettysburg, the Smithsonian, various historic sites in the northeast … you name it. My list is long. But when you live in Oklahoma, as we do, which is close to precisely nothing, such trips don’t come cheap. Gotta save, save, save for them.
So yes, I have savings-goal ideas — don’t we all? — but haven’t yet given a whole lot of thought to “What next?”
For now, I’m just happy to finally see that fifteen grand tally up at the top of my Quicken sidebar … and to know that my household is in better shape financially than it has ever been.
SparKman wrote:
Congrats on the accomplishment! Hopefully I can get there someday. Still working on my debts though. Home Depot card about to go down in flames……
Kristen wrote:
Congratulations!
Guy G. wrote:
Hey Michael,
I just wanted to send you a huge hooray!
First for the debt free goal, and second for the liquid savings goal. If you maintain those two big green bars and the 100%’s you’ll definitely succeed financially. It’s really good you’ve been following Dave’s tips on budgeting and sharing them with others. There’s no better way to get a handle on finances than starting with a goals.
Good luck with baby step number 4.
Cheers,
Guy