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how do you set short term goals?
Old 06-15-2014, 09:46 AM   #1
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how do you set short term goals?

I wanted to ask how (or if) others set their short term savings milestones.

For me, each $100,000 is a milestone. I get real excited when that odometer gets close to rolling over.

Also, I have a spreadsheet that divides my total investments by my various estimated spending levels, giving me my savings multiple. Hitting 20x a spending level is a goal for me.

I also have a annual savings goal, trying to reach for the stars each year with how much I can save. This years goal is 100k (which awesomely matches my first goal, a two-fer.
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Old 06-15-2014, 10:49 PM   #2
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I used a spreadsheet to keep track of savings and estimate future value of savings/investment accounts for several years. And I just kept adding columns for each weekly tally. So it was great to see the progression of savings as it extended across the spreadsheet. I still use the same spreadsheet even though I retired a couple of months ago. Now I use it as a basis for tracking investment returns.

I also use the same spreadsheet (different sheet) to track expenses, and make comparisons between monthly expenses and budget numbers.
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Old 06-16-2014, 08:07 AM   #3
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I used a spreadsheet to keep track of savings and estimate future value of savings/investment accounts for several years. And I just kept adding columns for each weekly tally. So it was great to see the progression of savings as it extended across the spreadsheet. I still use the same spreadsheet even though I retired a couple of months ago. Now I use it as a basis for tracking investment returns.

I also use the same spreadsheet (different sheet) to track expenses, and make comparisons between monthly expenses and budget numbers.

What a great time to retire, after the bulll we had last year. You were probably a few years away on paper or just teetering, then, Bam! Huge portfolio gains.
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Old 06-16-2014, 08:26 AM   #4
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I tried to set savings milestones early on but never achieved any of them and found that frustrating. Unplanned expenses and babies kept getting in the way. So I went with a savings discipline that took from the paycheck before we got it and focused on getting that % higher over time.
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Old 06-16-2014, 09:07 AM   #5
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I always pointed out to DW when we clocked another $100,000. Also 1/3's and 1/4's of 1M were also noted. This way, we often had something to look forward too and celebrate.

-gauss
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Old 06-16-2014, 09:26 AM   #6
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I seem to be constituted to enjoy living just on the edge of (pretend) broke. To that end I used to stash $100 bills and pretend they weren't touchable - also pushed as many dollars away from my hands as possible toward different mortgages. Still tend to prepay bills - particularly when I can reap a benefit, like prepaying telephone/internet bills ahead a year with a credit card that offers 5% cash back for that sort of transaction.

In the short term these sort of shenanigans make it tough to set goals, instead we are ambushed by accumulation. It is cool to hit multiples in Quicken's net worth number, and we were on track to hit a (for us) difficult multiple, but we are going to give a property to someone we want to see do well. That will hit our income and net worth and move the goal out away from us, but that's a good thing for me - suits my constitution and we would rather the giftee have the benefit of the property now rather than after we die.
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Old 06-16-2014, 09:38 AM   #7
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but we are going to give a property to someone we want to see do well. That will hit our income and net worth and move the goal out away from us, but that's a good thing for me - suits my constitution and we would rather the giftee have the benefit of the property now rather than after we die.
I can relate. Giving is about the most rewarding thing I have done in my life. I usually give time, not assets, but nonetheless it feels great when you do it wisely.
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Old 06-16-2014, 10:19 AM   #8
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I tried to set savings milestones early on but never achieved any of them and found that frustrating. Unplanned expenses and babies kept getting in the way. So I went with a savings discipline that took from the paycheck before we got it and focused on getting that % higher over time.
+1. Plus, with money invested in stocks the ups and downs of the market cloud things and make it difficult to get that positive feedback which can be important in keeping motivated.

We just set up our periodic deductions and kept inching them up with each pay raise (about 50% of each increase went into savings). That makes it easy to keep LBYM (because we never got accustomed to the higher take home pay). Periodically I'd do the math on what the XX $$ per month would amount to at X% assumed growth per year for 20 years, and that was a motivator.

With equities, you really can't control your account balance. For us, it was much better to set goals regarding something we could control--our monthly savings amount.
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Old 06-16-2014, 10:21 AM   #9
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....So I went with a savings discipline that took from the paycheck before we got it and focused on getting that % higher over time.
+2 I tried to save half of every raise and used the other half to fight inflation and improve our standard of living. Other than that, savings was pretty much on autopilot.
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Old 06-16-2014, 10:40 AM   #10
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To be very frank, I am not exactly sure how we got to FI, let alone having worked any measurable short term goals that were part of any plan along the way.

Over the last couple or three decades, life changes such as job losses, new jobs, children born, a messy divorce, a new DW with children, moves to the Midwest, back to CT, move to California, move to Texas, then striking out on my own, kind of kept me guessing all the time as to how to pull together enough to retire on.

I think the planning mechanism that made it work for us was to set up a course of action to live within the available income stream and set aside funds in tax sheltered vehicles and stay out of debt. You can call that a short term goal, or a set of short term goals.

DW was not one who entertained detail planning or goal setting in this attempt and left it up to me. Once the "smoke cleared" and kids were out on their own, the path became clearly visible.
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Old 06-16-2014, 11:19 AM   #11
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Originally Posted by aja8888 View Post
To be very frank, I am not exactly sure how we got to FI, let alone having worked any measurable short term goals that were part of any plan along the way.

Over the last couple or three decades, life changes such as job losses, new jobs, children born, a messy divorce, a new DW with children, moves to the Midwest, back to CT, move to California, move to Texas, then striking out on my own, kind of kept me guessing all the time as to how to pull together enough to retire on.

I think the planning mechanism that made it work for us was to set up a course of action to live within the available income stream and set aside funds in tax sheltered vehicles and stay out of debt. You can call that a short term goal, or a set of short term goals.

DW was not one who entertained detail planning or goal setting in this attempt and left it up to me. Once the "smoke cleared" and kids were out on their own, the path became clearly visible.
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Life sure has a way of messing with any plans we try to make! I think the one thing that really got me to relative FI was my Keogh and 401k. Every year when I saw how much I would pay in taxes, vs putting the max in the retirement fund, I kept seeing the government give me free money if I funded my retirement. Wanting to avoid taxes pretty much forced me to fund my retirement savings and into FI. Thank you big brother!
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Old 06-16-2014, 11:36 AM   #12
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When I was in the accumulation phase, my goal was to save more in that pay period than I ever had before, in prior pay periods. In other words, I was competing with myself. That seemed to work well for me, because I didn't close my mind and imagination to the possibility of saving more.
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Old 06-16-2014, 11:41 AM   #13
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Each $100,000 is pretty exciting I agree, but I guess we're focusing on the quarter million steps more so! The next one is 3/4 million set for a couple months from now. Every raise we get goes away before we see it. I constantly look at our spending habits in comparison to our income too.
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Old 06-16-2014, 01:02 PM   #14
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I think like ginadog.

We have date goals for every $250K from now until planned retirement in 12 years. If we reach those goals by the goal-dates, then we will have an amount with which I am comfortable retiring.


We also have yearly savings goals. Those are are set up automatically (electronically) and I hardly ever think about them because they happen before we ever see the money - maxing out our 401(k)s, plus extra gets transferred automatically from checking to savings and checking to brokerage. I "up" these amounts every year or two based on any raises we get.
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Old 06-16-2014, 08:31 PM   #15
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I tend to set up yearly goals for myself that are usually fairly obvious.

Max the 401k
Max the Roth IRA
Max the HSA

But each year I try to do just a little better than last time. One year I found a bank that'll give me $100 if I make 11 monthly $100 deposits which was a nice goal. Usually though its taking half of the annual raise and applying it towards taxable funds. For me it takes the small goals to stay motivated currently as I don't have the funds to see those 6 figure jumps from year to year just yet. But I'm well aware its the small goals that lead to the big ones
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Old 06-17-2014, 11:04 PM   #16
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This is something I suspect may actually be my version of a hedonic treadmill. I drive and love my "one paycheck" car and have like 30 of the same black T-shirt, but get all giddy when every 100k NW goes by. Starting out, the goal increments were smaller. Maybe 100k in the future won't even be noticed? Part of OMY syndrome?

My spreadsheet (and mint.com) track monthly savings rate, passive income vs. annual budget, NW / annual budget, and savings rate of total (net) income. The last one is my favorite metric.

We set financial goals / investment plans each year, including a target monthly savings rate.
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Old 06-18-2014, 11:41 PM   #17
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I apparently have goals every $10k too. Today after the fed meeting, the market bumped up and put me over 430k. Got a brief moment of joy that abruptly ended due to the brainpower being consumed by the mandatory forecasting i was doing to predict when i would hit 440k.
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Old 06-19-2014, 05:35 AM   #18
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I have never set short term monetary goals beyond having an emergency fund in the event of a job loss. The main goals we set are budgeting and savings.

DW and I sit down at the end of each year to budget for the upcoming year. We assume conservative income, maxing out 401k/IRA contributions, have a target savings rate, and work the budget from there. We determine the "exception" items (e.g. vacation travel, home improvement items to tackle, expected gifts for family/friends events, etc.) and see how they can (or cannot) fit into the budget. From our savings we AA into our desired cash/stocks/bonds percentages.

I may forecast where we might be for NW/assets by the end of the year, but that is not a goal. We just try to follow the budget and savings allocation, and let the rest take care of itself.
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Old 06-21-2014, 06:19 PM   #19
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+1 the 100k milestones are very enjoyable, last year's market brought a few to celebrate, I think they will always be good on the way up, not sure how I'll feel in the retirement years when I see them going the other way.
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Old 06-21-2014, 06:26 PM   #20
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I just keep following the plan. I have a spreadsheet of stuff I need to do financially this year. Nothing challenging, just things to remember.
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