While some people make the traditional 5-year and 10-year financial plans, I like to create a financial plan that falls just about in the middle at about 7 years.
Seven years, to me, is enough time to really allow me to make significant and life-changing progress on financial goals. For me, 10 years is just too far away that I can't get motivated.
Let's just say I have trouble picturing my "future self" so far into the future.
Looking back at where I've been
Before I can make my 7-year financial plan, I like to reflect on where I was 7 years ago.
While organizing some boxes recently, I came across our personal finance records from 7 years ago. It happened to be the year my husband and I purchased our single-family home in Florida so it was a fairly significant point in our financial history.
Seven years ago, I had just recently entered my 30s. We each only had about $10,000 saved in retirement. We owed about $148,000 on our new home since we put down 20 percent toward the purchase. We only had about $10,000 saved up for our sons' future college tuition. We had one $300 car payment and no debt.
Evaluating where we are now
Today we owe about $108,000 on our mortgage. I'm disappointed that we only paid off $40,000 in 7 years. It seems like it should have been more, especially since we paid extra. We still have a $300 car loan, but it's for a new fuel-efficient vehicle. Our retirement accounts have grown substantially in 7 years to about $150,000. I'm pleased with our progress. My sons are attending college, but they are on our pay-as-you-go plan since tuition is more expensive than we anticipated. We managed to stay out of consumer debt.
Deciding where we want to be
In 7 years, I plan to have our mortgage completely paid off. By talking to the customer service at my home mortgage company, I found out we have to pay an extra $500 a month to reach that goal. In four years from now I plan to purchase a new vehicle with a three-year loan. Therefore, in 7 years we will have our final new car completely paid off.
My sons should be finished with their graduate degree programs in another 7 years so college expenses will no longer be a financial concern. I don't know what the stock market holds for the future so I can't predict the value of our retirement accounts in 7 years, but I plan to contribute 20 percent of our income for retirement.
In 7 years, our financial goal is to have more disposable income by paying off our house and car. We will use the money to travel to visit our children. My husband will be able to play golf more frequently. I'll be able to spend more time on my hobbies.
I think our 7-year financial plan is completely doable.
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