Life

My One Page Financial Plan

I’m not the type of person who writes out their New Years Resolutions.  Hell, I don’t even really make New Years Resolutions.  That’s not to say that I don’t have goals – I definitely do – but have always kept them bouncing around in my brain as opposed to writing them down on paper.

Today, I’m writing those suckers out.  For a couple reasons.

The first is that I recently re-read Carl Richards The One-Page Financial Plan.  Carl Richards is a former financial advisor and writes the NY Times column The Sketch Artist, where he dispels deep truths about how we think and act on sketches on napkins.  At it’s core, TOPFP is about understanding WHY money is important to you in order to overcome your problems with it.  While I’ve personally thought about this problem a lot, I haven’t really taken the time to put it in words for myself.

Second, I’ve decided that I need to establish something of an Investment Policy Statement.  And Investment Policy Statement (as I’ll show below) is basically a list of goals you set with a clear head, and rules for you to follow when things get murky.  This is mostly because I’ve noticed myself getting too obsessed with current events (how they’ll affect the stock market) and second guessing my investments.

I know I probably read a lot more finance-related content on the internet than the average Joe, so I probably see a lot more “signs of the coming recession” articles.  Basically, I’ve been screwing around with my portfolio and projecting numbers too much, which isn’t very productive (or relaxing).

So I’m putting some things down.  It won’t be too complex, just a few sentences on things like saving, debt, and investing so I can outline whether or not I’m actually working my way towards something better.


My One Page Financial Plan

Why Is Money Important To Me?

For the last decade of my life, I’ve lived with the burden of debt.  Debt has influenced my decisions and played a major role in the direction of my life.  I’ve learned that a lack of money takes away your choices, while having money gives you more.  At the end of the day, I just want to have more choices.

What Are My Goals?

I guess one specific goal:

To live on less than half my income.

The way I see it, living on >50% of my income is the right mix to live the life I want now while giving myself a future with more choices.

I’ve learned over the last 3 years that the things I enjoy aren’t really that expensive (and most are free!).  The problem comes from not having the time, energy, or enthusiasm to enjoy them.  

So one more goal is to focus my time, energy, and enthusiasm on what I enjoy today, with the confidence of knowing that my future choices are still growing.

How Do You Make This Happen?

Spending, Saving, Debt & Investing

For spending, continue using a budget.  Using a budget has made my life way better.

For saving and debt, do the minimums (see Investing for 401k minimum), then decide.

  • Over the last couple of years, without a plan, I’ve pretty evenly allocated extra money every month to both of these.  Both will increase your Net Worth and give you more choices – remember that there is no wrong answer.  Whichever one makes you feel content at the time is okay.
  • Tracking 
    • I love tracking my progress.  Focus less on Net Worth and more on Savings Rate.
  • Progress
    • Don’t sacrifice today to improve your Savings Rate if you’re already meeting your goal.  Measure over the course of the year, and remember that some months are better than others. you really want to increase it, earn more, but in a way that is fulfilling today.

And think hard about whether or not you need to do something for more money.  Remember earlier when you said you wanted more time and energy?

Investing

Follow your plan below:

Objective

Create more flexibility and options by accumulating assets that can produce income.  Use FI as a roadmap.

Philosophy

Accept market returns.  Understand that after picking efficient funds and AA, you should focus on savings rate.

Asset Allocation/Funds/Accounts

Current:  72% Stocks (84/16 Domestic/International), 26% Bonds, 2% Cash/Alt.

  • Desired 80/20, achieve through investment contributions

Funds:

  • IRA (Vanguard) – VDADX (Stocks), VBMFX (Bonds)
  • 401k (Wells Fargo) – VTTSX (Target 2060)

Buy Vanguard or similar when you have the option.

Notes:

If possible, max 401k first, then IRA, then taxable account.  If not, minimum 15% to 401k.  Reinvest dividends.  Check Personal Capital AT MOST 1x a week, ideally 1x a month.


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Comments

2 comments so far.

  • mrspickypincher Reply

    Woohoo! Congrats on setting those financial goals. Now that they’re out here for the Internet to see, it’ll be an extra motivating factor, too. 🙂

    • Matt Reply

      Thanks Mrs. P! At the very least I’ve finally got my financial goals written down and a “formula” to refer back to, it’ll be interesting to keep track of as time goes on!

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