Goals for 2018: Big Things Ahead!

In this post, I'd like to share a draft  plan of what I think my 2018 Financial Goals will be.  It's only November of 2017 still, so I've got a few weeks left to adjust any of these goals if necessary, but as it stands right now I think these will be what I strive for in 2018, from a financial perspective.

My primary purpose with these goals is simple: to give me a benchmark of success, to know where I should be heading when things are unclear, and to evaluate how well I am doing over the long 365 days we have in 2018.

For this year I decided on 10 financial goals (in 2017 I had 10 as well), but this year I am adding what I will call a "stretch goal" as well - a goal that is far out of reach, one that I may strive for (or may not), so if it does end up actually happening, awesome. But if it does not, no big deal. Spoiler - this year's stretch goal is real estate related.

I tend to put a lot of thought into picking these goals and narrowing them down to only my top 10. But on the other hand, I also tend to think that one's financial success is more about the discipline of sticking to a plan over time than it is about coming up with the right, very complicated, or detailed, plan.  In my opinion, financial success is rather straightforward: save more than you earn, diversify, and invest wisely over many, many years. That is pretty simple. But it is definitely not easy. It is actually very hard sticking to your plan, day in and day out, when others are doing many other more exciting things, or taking exciting vacations, while you are diligently sacrificing and not derailing your plan with poor investment choices or reckless spending.

Let's take a look now at my goals for 2018. I'll be turning 32 years old this year, and will be entering the 3rd year of Passive Income Dude. With all of that said as an introduction, I'm anticipating BIG THINGS AHEAD!  Here we go:

1) $17,000 Earned in Passive Income.  

Passive Income is the primary focus of this site, and therefore the amount of passive income I earn each year is always (...and will always be) my primary financial goal.  For 2018, I think $17,000 by year end, which equates to a massive $1,416 per month, is an appropriate goal.  I'd like to share what I believe it will take to get there:

First, if I hit my goal for 2017 of $13,000, then $17,000 would represent a year-over-year growth of about 31%.  Ambitious, for sure, but achievable with the right steps and focus. I'll need to contribute a lot of new capital, avoid major maintenance or repairs in my real estate, and definitely avoid any long term vacancies.  Now, if I come up short on my 2017 goal of $13K, then this number will be even harder to achieve. But I doubt I will lower it from $17,000. $17,000 is the number in my mind, and so that is what I am shooting for!

2) $20,000 Cash Saved.

With the growth of my portfolio and family over the last few years, at this point I have kind of been playing with fire given how little of a cash cushion I have. Despite having 4 properties, a wife, two kids, and two cars, believe it or not I OFTEN have less than $100 liquid cash in my checking or savings account. Every month its $100 or less, believe it or not. This has to change. But this is going to be a very challenging goal; requiring serious discipline and sacrifice. None of these goals are easy, but that's what make them important and rewarding when they are completed.

Anyway, it's time to have an appropriate cash-cushion, and I think $20,000 by the end of the year is the right number. I will be starting the year with essentially $0, so this will be a good goal for me, and is my 2nd most important goal of the year. Does anyone have a recommendation for how much liquid capital you think one should have?

3) 30% Savings Rate Per Month.

My 3rd most important goal this year is my savings rate per month. In 2018 I think 30% is appropriate. While I think savings should be towards the top of anyone's financial plan, I also think that living and giving are actually more important, so I don't want this number to be much higher than what I've listed. In fact, 30% is 2% higher than my 2017 goal, and so I think it will take a good amount of effort to achieve 30%/month.

4)  Max my Wife's ROTH IRA

My next two goals are both IRA related. I am very passionate about ALWAYS maxing our ROTH IRAs, and this year will be no different. The amount needed to max a ROTH IRA is $5500 for each account, so this will take some diligence to make it happen.  

5) Max my ROTH IRA

No change from above.  There is no way my wife's IRA gets maxed without mine getting maxed as well. Notice I did put hers first in priority though! ;)

6) 810 FICO Score by the End of the Year

In 2017 I aimed for a 800 FICO score by year end, and it's going to be a photo finish to see if I make it. I think we're floating around a 785 right now. We may indeed fall short. But this goal is somewhat tied to my stretch goal below, and is also just a personal desire of mine to have a very high FICO score. We'll see what happens!

7) Contribute $161/mo As an Extra Principle Payment to my Colorado Property

This is a hard goal for me (even to write down, to be honest), as I have always been about maxing my leverage, not giving money back to the bank unless they require it as a down-payment, and always putting any additional capital elsewhere or into a new property...not into one I already have. But the reason for this goal is simply because with an extra $161/mo, I will then be contributing more principle each month towards my loan balance than the amount of interest I pay. And with so many years left on my loan, I think this small amount will almost pay for itself with the total interest saved over the life of the loan. In fact, I'm looking forward to seeing YEARS come off my mortgage end-date simply because of this small additional capital contribution. You'll probably see me lower this number as my interest decreases for 2019.  I will be able to back off my contributions, while still having more principle than interest.  As you can see, I'm only willing to do this SMALL amount extra! :)

8) Contribute $117/mo As an Extra Principle Payment to my Missouri Property 

There isn't much difference between this goal and the one above. I like my CO property much more than my MO one, and I only need an additional $117/month to have more principle than interest applied to this Missouri loan.  So I think this small amount should really help my "snowball" pick up speed in terms of "total earnings" for my real estate portfolio. Again, I'm only willing to do this small amount. :) and I'm still not sure I even believe in this strategy, but I am going to give it a try.  I'll call it "forced additional savings" for 2018, if nothing else.

9) Contribute 1% per Month in my TSP

This was a goal I had in 2017 that I did not achieve. A TSP is essentially a 401K equivalent for federal employees. Since I do not have much money left over after maxing my two ROTH IRAs and paying down debt, I haven't really ever tried maxing out my TSP (at $18,000 per year). I know I am at least a few years out before I have enough max my ROTHs and my TSP, so this year we are starting slowly again with only 1% of my monthly salary contributed.

10) $25/mo Saved in my Kids' 529 College Savings Plan

I'm still slightly behind where I need to be in terms of college savings, but frankly, I wasn't given any college funds from my parents, and so this is last on my list of financial priorities. In fact, a quick college-savings story for you: shortly after my wife and I were married, she received an inheritance of $10,000 from her grandmother. Since her grandmother was such an incredible woman who cared very much about education, we decided to honor her and use the entire $10,000 gift to start a 529 college savings account for our first son, mostly as a small way to continue her legacy. Since that original $10K contribution, the account has now grown to $20,000 after about 7 years. So I do not think we are extremely far off from where I would like to be with our kids college savings...but with two kids and maybe more on the way, we will need much more than that to fund their college experiences. But still, this is not a major priority yet with each of our kids under 4yrs old, which puts this as goal number 10 out of 10.

So there you have it. The top 10 financial pursuits I will strive for and will use to monitor our progress and benchmark our successes.

So that's it. One of my favorite things is getting feedback and learning from other bloggers' financial goals. Reading all of your 'Goals' posts is my favorite! So do you have any recommendations? I would greatly appreciate any thoughts you have!

Thanks for reading,

Passive Income Dude