Setting goals

So I spend a rainy Saturday analysing my own financial situation and reading about personal finances, setting goals, good and bad financial habits. And because a lot of the net worth building is done trading stocks about investing in general. This blog is all about setting goals.

Goals

After reading this article about financial goals everybody should have. I applied the rules to my own situation and set my own rules. For the full explanation of the rules I point to the above article, my blog only contains the brief outline. So let’s start.

  1. Get out of debt, completely

This goal is pretty self-explanatory. There are a boat load of websites on this subject and they will all tell you the path to financial independency starts with getting rid of your debt. The reasons are legion but I think the most important are: total control of your income, being able to save a larger portion of this income and no stress about down payments. I noticed that there is an ongoing discussion about good and bad debt. For myself, I have concluded that debt is a bad thing unless it earns you more than it costs.

My situation

When I graduated from university I ended with a college debt of €35,000.00 . And I bought a house in 2005, just before the housing market collapsed. For quite some time I spend everything I earned and more. But after some years I started to have fun I saving as much is I could from my income. So how far has this brought me so far? I repaid my college debt last year. And last year I also old my house, with a loss, but that was covered for by my other accounts. So in short, since last year I have absolutely no debts  left. And I must say that gave a lot of rest. I cost a lot of money but after that was paid there was no more interest accumulating on my debts.

  1. Plan for early retirement

Planning for early is a good financial because it takes a long time before you can retire. In Holland if you make no alternative plan you can retire at 67. And by making a plan you get some feel about the time it will take to be able to retire early. Maybe you don’t want to retire early completely, but it would feel good if you have the opportunity to retire completely or just cut back your working week.

My situation

I’m absolutely lacking in the plan for retirement department. Up until this year I was solely focussed on paying of my debts and gaining full control of my income and earning back my losses. So I had no idea that it would be possible to plan towards an early retirement but now I think this is what I will set my mind to.

  1. Create multiple income streams

To have a reliable income now and in future times it is good to have more than one stream of income. Basically it will give you an income portfolio which means you never have to rely on just one.

My situation

I have unconsciously created a pretty diverse portfolio of income streams. Most of them out of curiosity. But these streams don’t generate a substantial income yet. Most of my income comes from my paid day job. So a lot of work in this department.

  1. Be able to live on less than you earn. No matter what

No explanation needed. The less you spend the more you save, invest or put to work in any other way. Your income gets up and early retirement dawns earlier.

My situation

This is my  absolute weak point, for long I have spent exactly everything I earned. Never more but no matter how much income I generated it vaporized during the month. This habit ended when I started to make automatic deposits to my saving account.

And the fun thing is that when I my account grows larger I get more fun in saving as much as I can each month. But without a plan what to do with your ever-growing savings, the urge to spent it grows larger every day. This is basically why I started the million euro challenge earlier and now will plan towards an early retirement.

Conclusion

As you may have noticed I reduced the ten goals to only four. But these are the four I find most applicable to my situation.

Resources

http://www.budgetsaresexy.com/

http://raymondtung.com/2014/11/11/500k-net-worth-how-minimalism-and-investing-helped-me-get-there/

http://www.goodfinancialcents.com/good-financial-goals

http://jlcollinsnh.com/stock-series/

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