My 2006 Financial Goals

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I dislike resolutions, mostly because I am horrible at keeping them. I tend to look backwards at them, as in “Oh, I resolved to do X back then, but I haven’t. Oh well.” Goals are better for me, because it’s something to focus on with a date attached. I need deadlines! Here’s what I came up with:

Q1 2006

Separate business and personal financial worlds.

Open a SEP IRA for 2005 business income at Vanguard.

Do my taxes and research to maximize tax return.

Roll over Traditional IRA to Roth IRA.

Q2 2006

Implement Business Idea A. (haven’t decided whether to share yet)

Have achieved 3 new freelancing clients.

Q3 2006

Open either a Solo Roth or Traditional 401(k) for 2006 business income. Broker undecided.

Have Business Idea A take only a few hours a week to maintain.

Implement Business Idea B.

Q4 2006

By the end of the year, earn $20,000 in side income.

Explore LLC / S-Corp depending on success.

Things already done

These are things that I would put on my list, but I’ve already done them.

Set up an emergency cash fund.
Be debt free. (Neglecting you-know-what)
Prove that my wife and I can live indefinitely on only one income.
Fully fund 2006 Roth IRAs for both of us.

Am I missing anything?

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  1. Good ideas but having been there would consider skipping the sep and just going on and incorperating and open a Simple ret. at Vanguard it has a $10,000 max and isn’t affected by your pay. Also, you may have already checked it out but see if an HSA is to your advantage.

  2. This is off topic, but with Citi 0% APR BT cards they send you BT checks (3 of them). If I were to write the checks to myself. Would that be considered defaulting and therefore it would not be 0%? Jonathan have you tried it?

  3. Incorporating is hopefully in my future, but I don’t think it’s worth it right now at my puny income levels. I don’t want to sock away everything anyhow =) HSAs are a good suggestion. I should add it to remind me again. I missed the deadline to change my insurance last year.

    Micah – I would double-check any fine print that came with the checks. If it says there is no balance transfer fee, then you are all set. They don’t care who you make it out too. You, your mom, your dog… =) Yes I’ve cashed them myself.

  4. Explore LLC / S-Corp depending on success.

    Even if your profit level is pretty small for your side business (10k per year) it makes sense to incorporate into an s-corp so you can avoid that hefty self-employment tax. It hurts (as you discussed in an earlier post I believe). Incorporating is NOT very expensive these days.

  5. Consider a solo/self 401k instead of a SEP if you?re trying maximize your deferment. (if you can afford it).

    SEP: super-duper easy to set up, contribution max of 25% of income (less SE tax,etc), up to $44k (for 2006)

    Solo/Self 401k: a bit more hassle on the paperwork side, contribute up to 100% of pay, up to $15k, PLUS an employer contribution up to 25% of pay (up to 44k total).

    Both plans have a net max of 44k, but with the self-401k, it?s easier to get there. Of course, you have to be able to afford to put that much away?

  6. Yeah, ok – I just reread your post and your SEP if for 2005. I also see that you’ll be doing the 401k later on.

    Sometime later in the year you can the roll your SEP into some other IRA so you don’t have a little orphan account.

  7. Wes- I know, I wanted to do Solo 401(k) now, but for 2005 income it had to be set up (but not necessarily funded) by 12/31/05, which I didn’t do. =( Ergo the SEP IRA, which can be set up and funded by 4/15/06.

  8. Jonathan:

    Why is there so much credit card debt? I hope you have gotten something that is 0% interest.


  9. Nimbette2 – ALL of it is at 0% 😉

  10. Good thing that you have set up goals!

    Regarding proving that you can live on one income: Anyone can live on any income above 20,000 $USD a year. He/she just has to reduce wants. (needs are only a bit of bread, water, air, and some kind of shelter).

    The question is not to prove if you can live with only one income. It is to prove you will like it.
    BTW, my wife and I live on less than what either of us make. Most of our earnings get quickly invested.

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