2015 was literally the busiest year of our lives.
- Unexpectedly moving out of our apartment with 48 hours notice due to maintenance issues
- Living with parents for the month of June
- Changing jobs
- Buying our first house (and the problems that come along with that)
- Being asked to relocate across country for my new job, only to find out 24 hours later I could stay where I was
- Buying a second car (with my new job I could no longer walk/ride my bike to work.)
We also had a lot of great things happen though, from vacations to a 76% raise when I changed jobs.
Heather and I learned a lot of financial lessons in the meantime, which are going to set us up really well for 2016.
So here are the top 3 goals financial goals we have for 2016:
- Top off our emergency fund (Figure out how much of an emergency fund you need today)
- Take our auto loan or student loan debt down as much as possible.
- Supplement our current income with consistent (not necessarily substantial, we know that will take a while) side income
The emergency fund top-off
We’re above the $6,000 mark in our savings right now, but in order to cover 3+ months of expenses (based on our house, an aging car & my wife’s diabetes, we want a bit more than the 3 months many recommend) we are needing more than that.
In January and February, we’re focusing on moving that up to $8,000.
Once we hit that mark, we’re going to slow down putting money in that fund.
It’s heading to our debt.
Car loan or student loan debt payoff?
The biggest question my wife and I are talking about is whether or not to focus on paying off our car loan this year ($492/month) or our student loan debt ($252/month).
Not only is the debt obviously something we just want to get rid of, we’re anticipating having to add health care expenses in 2017 and that will add more to our monthly obligations.
Some things that we’re considering for paying off our student loans first are:
- Our student debt is about $12,000 higher than our car loan
- While we have a few different types of student loans, on average our interest rate is about 1 percent higher than our car loan
- Our student debt is costing us more in the long run
But, it could be beneficial to pay our auto loan down first because:
- It’s $12,000 less than our student loans, so we would be able to pay it off faster. Some say it’s more motivating to take those small wins.
- It takes up almost $500 in our monthly budget versus $252, so we would bring our monthly obligations lower.
Honestly, I don’t really have an answer at the moment for what we’re planning to do.
If we didn’t have those health care expenses coming up, we would be paying down our student loan debt since that will ultimately cost us more in the long run.
And really, that’s how we normally approach financial decisions.
But those health care expenses add a wrinkle to our decision making process.
Either way, we are going to make a huge effort to reduce our overall debt this year.
Build up our side income
My wife’s health sometimes makes it hard to keep a consistent work schedule.
As we look down the road toward her wanting to focus more on her health and starting a family, we want her to have flexibility with her job.
Enter side income.
We certainly don’t need it to be substantial, but it ideally will be consistent.
We both have our side projects and we know it will take time to start bringing in some extra cash. But we’re going to put the effort into projects we enjoy and see what comes of it.
2016. It’s going to be a good year.
We have a lot planned for the year including traveling and family events.
And as much as we focus on our finances, I sometimes have to step back and remind myself that there is more to life than money.
Saving for the future and being responsible with money now doesn’t mean that we can’t enjoy our lives.
So here’s to an enjoyable, productive 2016.