In my last post I mentioned that we had reached one of our short term goals; reaching $100,000 in savings.
I’m not sure if I explained how our savings is broken down so here’s a short run down:

$59,000 of this is in our offset account which is tax free. This link explains what an offset account is. We won’t touch this money since it saves us interest on our mortgage. Our mortgage rate is currently 9.190% so that would mean we would have to find an investment that would earn us 12% interest to make this a wise decision. I just don’t see that happening with this bear market anytime soon. The mortgage will continue to be paid down each fortnight (two weeks) so this will go down. We should have this paid off in five years but this might be sooner if our payments are increased by our bank.

Move savings into a Vanguard Index Fund by Jan. 2009
The rest of our savings ($42,000) is in an online savings accounts earning 7.5%. I want to eventually move some of this into a Vanguard Index Fund.

Save over $40,000 in 2008
We managed to save $40,000 last year so I would like to improve on that this year. So far we have saved $20,028.64 so we’re about where we should be. We don’t have any major expenses or trips planned for the rest of the year so we might be able to do it.

Improve other income and interest savings
Our other income and interest is averaging around $300 a month so I feel we could do better in this area.

When we turn 40 start putting more into our retirement accounts
Currently our employers put the standard 9% into our superannuation accounts (similar to a 401k). We will probably increase this to 15% or maybe more in a few years. I’ll have to evaluate where we are when that time comes. Charlie will also be able to salary sacrifice into her superannuation. This means instead of paying tax, it will go into her retirement account. At the moment Charlie has reached the salary sacrifice cap $8,000 a year which goes towards our mortgage. It’s kind of hard to get your head around at first but the savings are tremendous. Here’s a good article explaining how it works:
http://www.moneybuddy.com.au/personal-finances/tax/salary-sacrifice

Change jobs
I’m really torn over this one because I love the people I work with but I don’t really enjoy the job itself. It’s much too stressful and chaotic at work. I think I would be better suited working in a bookstore. I’ve also been using this job as a crutch because it was my first one after overcoming my anxieties. Talk about being thrown from the frying pan into the fire. I went from almost being agoraphobic to a chaotic working environment dealing with thousands of customers a day! Although I may not enjoy it at times it has been a great experience for me. I also know I could probably make more money elsewhere (this is a minimum wage job that pays $17/hour). What can I say, I am a constant underachiever. By writing this blog, I’m actually using my university education so at least it didn’t go to waste ;-)

Buy a house?
We’re also not sure about this goal either. We are currently in a unit and would love a house but we don’t think this would be a wise decision financially. Unfortunately the average house price in our area of Australia is $500,000. It is going down a little but so is the value of our unit so it’s relative. I think we could do it if we managed to maintain our annual savings of $40,000 but we would have to sacrifice our desire to travel which leads to our next goal.

Travel
This falls under financial goals because it costs a lot of money, especially with airfares increasing every day. We want to travel while we’re still youngish. There are so many places to visit but our top five are:

1. New Zealand, especially the South Island (We were going to do this in Feb. 2009 but have put it off till 2010 since Charlie’s job situation might change).
2. Machu Picchu
3. Egypt
4. Canadian Rockies
5. A safari in Africa

In the last 12 months we spent 10 days in Port Douglas snorkelling on the Great Barrier Reef and visiting the World Heritage Listed Daintree Rainforest (our holiday was fantastic!). We also spent a week in Sydney this past April which was also a wonderful holiday. Until we’ve saved what it requires to make those big trips we’ll continue to make cheaper trips around Australia. It’s a gorgeous country with so much to see.

Both short and long term goals are absolutely crucial to becoming financially successful. Without goals people tend to just meander with no idea where they are headed or what they’re going to do when they get there. It’s also nice to reward yourself when you meet these goals whether that be a glass of wine, a small splurge or dinner out somewhere. I’ll let you know in the future if we’re meeting our goals.