Wednesday, July 8, 2009

Five Year Plan

This post over at Money Under 30 inspired me to come up with a few goals for my own five year plan. Here they are!

• Completely pay off my student loans
• Save at least $50,000 in retirement
• Make more than $50,000 a year

Specifics

• Completely pay off my student loans
I will graduate in May 2010 if all goes according to plan (which it will, because I hold a Ph. D. in horrible...oh, wait. Never mind.). When I’m finished, I expect I will have just under $20,000 in loans and will have received $15,000 in tuition reimbursement from my company (some of which will be used to pay cash for summer classes since I don’t qualify for aid for those). I’m not yet sure whether I’ll be dumping that $15,000 straight into the loans to cut the principal down, or doing something else with it (like meeting my savings goals and then just paying the loans on an accelerated schedule).

• Save at least $50,000 in retirement
I originally set this goal at $35,000, but I’m currently at ~$12,700, so I would have about $4,600 to save per year and I’m pretty sure that’s too easy! Right now I am contributing 6% to my company 401(k) which my company matches, and I put $1,000 into a Roth IRA for 2008. I’d like to keep the contributions at 6% for the company match, then max out a Roth IRA (about $416 a month to hit the $5,000 yearly limit). Doing both of those things puts me on track to save about $7,160 a year (not including the company match, another $2,160, and it assumes that my income stays exactly the same which it better not), for a total of $35,800, which would put me over my $50,000 goal. This also assumes the stock market even exists in five years and we’re not trading rocks for food or something.

Unfortunately, unless I drastically rework my just-reworked budget, I can’t afford to put that much into a Roth this year, thanks to my $5,000 medical spending withholding. What I promise to do is to put my bonus (assuming I get one) and any other “found” money into one, and save all extra money from budgeted categories for retirement instead of fun money. I’m so inspired by Moneyapolis and her aggressive retirement savings, but I’m waaaaaay behind her in dollars but not that much in age. I’d like to get a little more serious about it.

• Make more than $50,000 a year
I’m too passive about my career and what I’m getting paid, and my excuse for the last year has been that I’m in grad school and don’t want to go salary-chasing. But next year, I’ll have a master’s degree and six months later it will be time to move along if I haven’t been seriously promoted and given a raise. And it’s very realistic that I could (and should!) be making that much in the next five years. In fact...maybe I’m being too conservative here. But since it’s the one I have the least control over (and I work in publishing, well known for low salaries), I’ll leave it at that for now. Success as of April 2010!

So there you have it. Five year plan, or part of one.

2 comments:

  1. Interesting post. I think its a good idea to aim for $50k for retirement rather than $30k because with 401(k) match and Roth contributions both counting towards it you will most likely make it.

    My five year plan will depend a whole lot on the type of job that I will get after I get out of law school.

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  2. I'm working in journalism - also notorious for low salaries.

    I want to make my own five year plan, too - I just don't know what I want, really, but maybe if I keep it more to numbers than anything else I could do it.

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Thanks for commenting!