This past year, I’ve made some good headway towards my 2010 goals, mainly with paying down debt and increasing my credit score. Yet I’ve found that one of my primary goals, increase my savings, got lost throughout the year. The biggest reason this goal failed was that I didn’t set specific enough mini-goals with strategies to accomplish them. I’ll be breaking down my goals in parts with a wrap-up article scheduled as a guest post at another site later in January (I’ll share that link then).

Breaking down goals into bite-sized chunks seems to work well, at least for me. So for my first 2011 goal, increase my savings, I’ll structure it to make it more manageable and make myself accountable.

  • Boost my savings accounts (there are a total of 3 of them)
  1. Label my savings accounts accordingly: Big-Purchases, Wealth Building, Emergency Fund
  2. Automate my savings amounts so it’s less likely I’ll spend the money. The amounts are as follows: $400/month into the big-purchase fund, $270/month into the wealth building fund, and $80/month into my emergency fund. This increases my monthly savings by $200. It also assumes that I’ll be saving a little over 13% of my income providing my income remains stable (that seems to be my biggest hurdle).
  3. Create quarterly goals for each account – I need this goal mainly because my income is erratic: By March 31st I should have increased my big-purchase fund by $1,200, wealth building fund by $810, and emergency fund by $240.

To make this plan work, I’ll be posting the next 4 parts of this year’s goals throughout the next couple of weeks. The biggest factor for increasing my savings account is to find out where in my monthly budget I can scrounge up that extra $200. I know it’s there; at least that’s what my Quickbooks reports are saying. I recently renamed my three major accounts, thanks to my husband’s input, and may need to switch the monthly savings amounts around a bit. But the total amount saved each month will hopefully remain the same. Stay tuned for the specific strategies that are going to help me meet this primary goal.

What goals are you looking to accomplish this year? Do you have a strategy to accomplish them?


  1. Financial Samurai Reply

    4 parts! Nice! Good luck with your extra savings goal. Should be no problem, especially if we get all the Yakezie campaigns rolling in 2011!
    .-= Financial Samurai´s last blog ..Don’t Be Afraid To Make New Year’s Resolutions =-.

  2. I am formulating my goals as we speak. I haven’t really goal set before, oddly enough.

    Sounds like you have a good plan set in place!
    .-= Everyday Tips´s last blog ..If The Shoe Fits- Buy It! If It Doesn’t Fit- Run Away =-.

  3. Have you considered just having a single savings account and then tracking and partitioning your contributions on a spreadsheet?

    Just curious about your thoughts on that. (It’s basically what I do.)

    All the best,

    Len Penzo dot Com

    • @Len Penzo – No way! If it were all in one account, it would be way to easy for me to touch the amounts I’m supposed to be setting aside for specific purposes. I know that having so many accounts sounds complicated, but I can track most of them through one website and easily transfer funds here and there. I’m also not paying any bank fees, believe it or not, so it’s not expensive in any way. Thanks for the thought, though.

  4. @Jeff – Oh, the “big purchase” pot is a name my husband came up with. To me, it means a house in the future, to him it means many “big” purchases such as some new furniture, possible travel, and maybe someday a house. 😉

  5. @Jennifer – It sounds like you also have some very defined goals for 2011. Good luck to you on eliminating your credit card and student loan debt!

  6. Hi Little House, I what saving strategy would you recommend for someone still student and working full time? I do enjoy this blog and find it very informative!

    • @Mem – I’m a student as well and I also work full time. The first step would be to prepare a monthly budget and see if you have some money left over every month you could throw towards savings. Without knowing how much you bring in and your necessary expenses, it’s hard to determine how much you could potentially save. I use a budgeting worksheet I created. Click here if you’d like to download it.

  7. I plan on changing my lifestyle next year, but slowly so it doesn’t get overwhelming. I’m even seriously thinking about getting a new job or at least trying to.

    Except for my finances! I plan on setting strategies and sticking to them like a hawk (taking into account the financial disruption that potentially getting a new job can bring about).

    Great start, I’m looking forward to Part 2 🙂
    .-= Money Reasons´s last blog ..Holistic Approach to New Year Resolutions =-.

  8. retirebyforty Reply

    Looking forward to the specifics. I didn’t set any goals last year, but will definitely set some specific goals this year.

  9. Good work on the action plan! I find that monitoring performance works even better in smaller periods, whether weekly or monthly. Good luck.
    .-= krantcents´s last blog ..What is your New Year’s Resolution =-.

  10. For me the money has to be hard to access. I tend not to touch money if there is some kind of negative consequence to touching it…like paying a brokerage fee or penalty. I have a “savings” account that I access all the time. It was supposed to be my emergency fund, but it never ended up working out that way.

    • @First Gen American – I think that’s why I have so many accounts; a couple of them I’m better at not touching than others. If I can easily access it, forget it!

  11. I like how you evaluated what happened in 2010 and came up with a strategy to make the goal achievable in 2011. I had to do that with my goal to lose weight.

    Good luck and Happy New Year!

  12. Ronald R. Dodge, Jr. Reply

    For me, I set various financial goals to meet each year with monthly and quarterly monitoring of the different financial aspects. The last 6 years has been really crazy with the various events that’s taken place, thus made the income side less predictable and much lower to work with. As such, I have had to be very careful about setting our household’s financial goals.

    As for what Len Penzo said about using a spreadsheet, I have to agree with her. Main reason is if I was to separate out my money into separate different accounts as you have stated doing for this year, that money would not be working together, thus it wouldn’t be earning the income nearly as well for me as it does with it all grouped together. Those different savings you mentioned outside of retirement funding (really part of wealth building) all fall under what I have as my emergency funding.

    In 2010, I accomplished *ALL* of our financial goals I had put into place for the year. There was one goal I normally would have put into place for the year, but suspended that particular goal for the 2010 year given another goal that made that one goal practically impossible to meet. That one goal deals with residual daily income/(expense) improvement goal. Normally, I make it a point that all contributions into retirement funds and into the emergency fund as well as all fund to reducing debt ultimately increase daily residual income by $3.65, decrease daily residual expenses (the financial portion of residual expenses) by 3.65, or some combination of both. Really, it’s one or the other or some combination so as the combined improvement is $3.65. That may seem easy, but when you do the math and break it down, such as how much will $100 put to savings will earn you over the course of 1 year, which then is divided by the number of days within the year, you will then see how little that number really is. Note, this goal is on an AFTER TAX BASIS, not before tax basis, so it makes it even that much more tougher.

    As for what people say to put into automatic mode with savings, for me, given I’m tracking everything via Excel, that statement of me missing it doesn’t quite apply. The one area where it really shows up is within the Cash Flow Management Worksheet, that I have broken down to daily level and I do have it current out to the year of 2020. Not all of those years are fully planned out, but at least through 2016 is more or less fully planned out to the extent reasonably possible being biased on the worst case side.

    The single biggest financial objective I put into place after having done the self study on retirement back in 2001, 25% of *ACTUAL* Gross Earned Income (that’s including the funds from the employer’s matching policy to the retirement funds) must go to countable savings. Earnings off of investments don’t count as part of countable savings as they were earned off of money in saving vehicles. However, if such funds are taken out of such saving vehicles, they get counted against the saving goal. So what are countable savings?

    1) Net contributions into retirement funds, both by myself or my wife as well as by either of our employers put into such retirement vehicles. As for the amount counted towards the daily residual income amount, that’s all depend on our tax situation, length of time to retirement, expected marginal tax rates in retirement years, and the performance track record of such saving vehicles (Yes, I calculate the trends and use those trend numbers within the financial plans file. Of course to calculate the trends, I must also keep track of the performance of such vehicles as time progress, which I keep a very close eye on that given such 401(k) plans been trending about 2% below market benchmarks, which makes such funds not nearly as appealing to go for, thus why I only go to the point of maxing out the employer’s matching policy).

    Net contributions into the emergency fund (this fund is actually made up of different types of emergencies such as medical issues, sudden unexpected loss of long-term assets [I.e. our van got totaled in a 4 semi wreck with our van hit by one of the semi’s, thus such loss was seen as potentially could happen, but wasn’t likely until it really did happen, thus why it was as sudden loss] or sudden loss of income as true emergencies, and some as not really true financial emergencies such as repair/replacement of long-term assets from normal wear and tear or normal usage). We haven’t fully met the demands of this fund, but we are gradually working on it as to meet all of the demands of this fund, it’s not something that can be resolved within one year, but rather over several years. There was a time when I had only $1,000 emergency fund as a baby emergency fund. These days, for that baby emergency fund as Dave Ramsey mention about, it really need to be $2,000, not $1,000 as Dave Ramsey’s numbers are outdated. After that, to get a fully funded EF, you need to have 1 year’s worth of necessary living expenses, what I call cash flow demands from my cash flow management worksheet, plus the total accumulated depreciation amount of all of your long-term assets via the depreciation schedule as dictated by the US GAAP rules dealing with depreciation on long-term assets, and any other money you need to cover for those sudden losses you will need to have recovered very quickly such as what would happen if your home is destroyed by a tornado or hurricane.

    Yes, that leads to a very large EF, but fear not, unlike Dave Ramsey, I don’t agree with having all of that in a saving account. I highly suggest having a large chunk of that in investments that can still be easily transfered back to cash without too much of a penalty/transaction cost to it. Yes, you run the risk of losing the money, but that’s also why you follow other rules such as diversification, but to do that, your money need to be grouped together in one account in most cases, so as that diversification can be much easier to do with very little lag time, if any.

    The third item is net debt reduction. This is pretty much self explanatory. It’s total debt reduction less any additional amount of debt you took on.

    Any money you put into the retirement fund, EF, or to debt reduction counts towards your countable saving goal (in this case, toward the 25% of actual gross earned income goal) and if you take money out of the retirement funds, EF, or add to debt, it counts against this countable saving goal. Note, any money used to pay transaction fees or to other finance charges like interest or late payments, those monies don’t count towards the saving goal.

    This 25% of actual gross income going to countable savings goal is one such goal I will not veer from as I lived on strictly Child SSDI in the early 1990’s, and that was no picnic. While most people don’t have such experiences that last for years at a time, I’ll never forget how I felt living on such limited means having to drink 1.25 gallons of water per day during the hot summer only to literally sweat it out as I couldn’t afford A/C during those 95F 95% humidity summers. The only thing that kept me going, I was in pretty good physical shape from all of the running (cross country running) and biking (mountain bike was my only viable means of transportation at the time) I did. I can recall sitting on the hard floor sweating thinking, this is okay for me to deal with here and now, but when I’m an elder, I highly doubt I will be in this good of a shape to be able to deal with these conditions on such limited means.

    Between that experience and having seen too many ancestors on both sides gradually dying from lack of sufficient income to properly take care of their health in their retirement years has been the driving force in me to get us into much better financial position, thus one such reason why I will not veer from the 25% goal I came to the conclusion of after taking into account of life circumstances in the picture. That 25% gives me a 98% chance of having a successful retirement amount to live on. That 98% is based on 3 standard deviations on a normal bell curve, which you will know what that is if you know what statistics is and how it works.

    2011 goals:

    Same as before with the 25% of actual gross earned income going to countable savings.

    Enough to improve daily residual income/(expense) by $3.65

    Keep up with the debt payments, though only have student loans and the mortgage to pay on, thus for the most part minimal payments, though in the case of the mortgage, will need an additional $4,000 go towards it so as to get rid of the MIP on it. Most likely, a large chunk of that will happen in February with the significant tax refund from the federal IRS even though I claim EXEMPT on the federal W4 form every single year prior to the February 15th dead line as I meet both requirements to claim EXEMPT on the W4 form.

    For me to do all of these things on paper, no way possible as there’s too much calculations involved. Yes, I’m very good with math as I been known as the human walking calculator or what ever people want to call me. However, to expect me to do all of that math, way to time consuming thus why I use Excel to do it for me instead. Of course, I had to setup the formulas, which I started out with the basics and it was over the course of 18 months (July 2001 – January 2003) when it got to a point when it had pretty much all came to a settled down functional file to meet my requirements with the various things taken into account. Even these days, there are still minor changes to the file from time to time as we progress though the order of finances, but the changes aren’t so dramatic anymore.

    The big thing for us, November and Decembers are the 2 months of the year that’s don’t normally see much of an income, though 2010, November saw a $1,000+ improvement to the Short-Term networth value, but yet, as expected, December still saw only a very small improvement to Short-Term networth value. Biggest reason for that, we did have a 2 part vacation trip in December. As such, that also has to be accounted for in the financial plans, which I account for that every single year. As such, I make it a point to increase Short-Term Networth Value by $12,000 within the first 10 months of the year without hurting the Long-Term Networth Value or our wealth building goals. As for long-term networth value, I do look at that, but I don’t criticize that as much given much of it is still influenced by market and management effects in addition to the Short-Term networth effect. Therefore, it doesn’t make much since to set goals against something that I don’t have direct control over given the various stipulations put in place.

    As for extra money that comes into the cash flow management worksheet (that is those amounts that wasn’t already planned for), a good chunk of that goes directly to countable savings. However, a small amount may still end up going to employment expenses and entertainment expense (once again, all work and no play is no good, so you need to do things fun from time to time to keep you psychologically in the game). For employment expenses, that may be 25% to 40% of additional income (most of that may be to taxes and commuting) and no more than 10% to entertainment, so that still leaves 50% to 65% to countable savings.

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