Planning for your financial future
How one guy, who saved for a wedding, a house, and the chance to retire, tried to make sure he would have the money to pay for it all.
Harold Shelton III, a sports journalist and researcher at the Big Ten Network in Chicago, had big plans and an average income.
At 31 years old, Shelton had a big list of immediate financial goals: paying for a wedding while paying down years of credit card debt, and then later, saving for a down payment for a new home and building a retirement account balance. He was a little nervous, but knew that with time on his side, he could slowly but surely put money in all those buckets. Below, he explains the four steps he took to build a strong financial future in the months leading up to his wedding.
First step: paying down my debt
I’m proud to say that I just paid off my student loans. Now I’ve got a lot of other things to save for, but I’ve also got more money available to do it.
My student loans weren’t that much — a little more than $10,000 — but it was hard because I was paying down $8,000 of credit card debt as well. I had applied for a few credit cards after college graduation, and I used them when I moved to the Northeast to pay for moving expenses and a higher cost of living. That weighed down my credit score, which made my interest rates higher — and added more debt to the pile. So I was underwater a bit.
I decided to get things under control. I transferred my existing credit card balances to a card with a lower APR and I made a payment on that card every two weeks. Because I had a lower interest rate, I could focus more money on paying off student loans. I even paid a little extra over that time to get the balance cleared faster.
I’m happy that’s over with, and I’ve vowed not to let credit card debt overwhelm me again.
Second step: making a list of financial goals
Now I’m moving on to making plans for the future and how to pay for it. Here’s the list, from short-term to long-term goals:
- My wedding. I’m getting married in July, and the expenses certainly add up. Total costs for the venue, photography, music, food, and other things are roughly $30,000.
- A new home. As soon as we’re done paying off the wedding, we’re focused on putting together the down payment for a home. We definitely want to stop renting; it’s just a matter of where to live and what type of residence we’ll buy — condo or house. Any wedding money from family and friends we’ll use for that down payment.
- Building up short-term savings. I started challenging myself to save more a couple years ago. I saw something online for a 52-week savings strategy and decided to do it because it looked simple. I saved $1 the first week, $2 the second week, $3 the third week, and so on. I ended up with $1,375 for the first year. In 2014, I doubled the challenge — $2 for the first week, $4 for the second, $6 for the third, etc. At the end of that year, I had $4,000.
- Protecting ourselves with insurance. My fiancee and I looked at our jobs’ health benefits to see who had the better plan and whether it was best for me to join her plan or her to join my plan once we get married. We also decided to get additional life insurance outside of our work just in case one of us has to leave our job.
- Retirement savings. When I left my previous job, I rolled over my 401 (k) into an IRA account. Now I have a new 401(k) plan through my current employer, which matches the first 6% of my salary I put in. I started at 10% but lowered it to 6% due to wedding payments. But once that’s over, I will push it to 12% to catch back up.
“I saw something online for a 52-week savings strategy and decided to do it because it looked simple. I saved $1 the first week, $2 the second week, $3 the third week, and so on. I ended up with $1,375 for the first year.”
Third step: making some money adjustments
To pay for the wedding and any other short-term goals in the future, I’m doing two big things:
- Making a budget. I don’t use any fancy tools, just a spreadsheet to track what I’m spending in a month. I set a maximum number, and I typically just reach it or I’m a little below. If I am a little above, it’s fine. The goal is that I know how much I’ll spend on monthly expenses, and I can plan my savings and other needs around that number.
- Cutting the frivolous spending. When I was in my 20s, I used my money to buy shoes, a video game system, speakers, insert any frivolous object here. I could have put that money aside into a savings or investment account, and I regret that I didn’t. Now we’re more money-conscious: We don’t eat out much, buy in bulk, pack lunches for work, and I take the bus instead of driving. Little things like that add up.
“We don’t eat out much, buy in bulk, pack lunches for work, and I take the bus instead of driving. Little things like that add up.”
Fourth step: seeking advice to feel more secure
I feel pretty good right now, but I’m not feeling totally secure. A lot of things will take care of themselves when the wedding is over, and my fiancee and I can pool our resources and make a more long-term financial plan. That’s where financial education comes in. One thing I definitely want to do soon is meet with a financial advisor to learn how to make better financial decisions. That know-how will let my fiancee and me put our heads together and feel more comfortable going forward.