It’s the time of the year for New Year’s resolutions and an assessment of how 2013 went for myself. Financially, it was a good year for the market, with the S&P 500 returning ~31% with dividends. I did a little better in my 401k at 34% so I must say without a shadow of a doubt that I am producing outsized alpha in my mutual fund selection. More seriously, I can look back at 2013 with pride at accomplishing my goals: ~38% pre-tax savings rate, a large increase in my net worth and a home purchase are now under my belt from the year. It has caused me to look forward to 2014, which leads to the inevitable resolutions.
Take Charge Today
“I think in terms of the day’s resolutions, not the year’s” – Henry Moore
Most of my friends I’ve talked to over the past few weeks have discussed their big plans for the New Year’s or 2014 in general. It’s no secret that gyms are way more packed in the first week of January than any other time of the year. I’ve always been wary of New Year’s resolutions out of no other reason than there is nothing special about New Year’s Day than any other. If you feel like you should lose ten pounds, start today! Pinning your hopes on the magic of a certain day to give the mystical powers of overcoming an obstacle is in essence admitting you are not in control of your behaviors and habits. Why place so much importance on the number of the year to setgoals and not just what your own wants and desires are?
So, No Plans for 2014?
With that in mind, I still like to set myself goals or targets for the year. I may be a bit of a hypocrite for establishing goals, but I like to see these as not distinct from any goals that I already currently have day-to-day. The only reason that I am making them tangible is so that I can measure my progress specifically later in the year.
Firstly, I have $34,000 in consumer debt. I graduated university with ~$56,000 in student loans and a car loan and I decided to focus my money on purchasing a house even before I paid these loans off. Now that I have purchased my first home and started renting the additional rooms out, I think shoring up my cash flow should be my first step. This will allow me to free up all my additional cash for either more houses or the stock market.
Secondly, take the GMAT (and do well). I am still undecided at this point whether I want to pursue an MBA (discussion for a later article, perhaps) but I still want the option so that I have actual leverage in my professional life. I try to avoid the feeling of being tied down geographically, professionally or financially. For example, when I purchased my house I made sure that the house would easily be cash flow positive if I ever had to leave the state. That way, I can move and not have to sell the house, which could be a drag on your net worth due to the transaction costs.
Thirdly, and finally, I have a series of home improvement projects. As those of you with a primary residence are aware, often the biggest cost for home improvement projects is the time and energy exerted. Financially, I could go the route of spending all my money at once and knocking off my to-do list of about 8-9 major projects. But, to be able to digest all the changes I am planning on doing a major home renovation once a quarter. Most of the changes are cosmetic and I am not planning on selling soon so they are not urgent but I still wanted to get these done in the very near future. The only project I’ve decided on is by April 1st to completely overhaul my master bathroom (article series to come).
Set resolutions every day, not every year.