Financial goals for 2008

2007 had been a good year for us, financially and in other areas as well. And I expect/hope that 2008 will even be a better year. From a personal finance perspective, I’ve set a number of goals this year:

1. Build our house. We should start construction by next month and our dream house should be done by the second or third quarter of the year. This project is going to be a challenge to our cash flow. We’ve already taken care of financing the monthly amortization, but we have fees, furniture, fixtures, and appliances to contend with.

2. Start our business. This has been in the planning stage for far too long. This is the year we are launching. I expect to add at least P120,000 to our annual income. But I’d be happier if we can double or even triple that.

3. Increase earned income by P300,000. At least. With the new business, plus 1 or 2 side projects, it’s possible to meet this goal.

4. Start saving for “retirement.” We haven’t really set aside regularly for our goal of financial independence. I ran the numbers, and “just” saving and investing P300,000 a year for the next 20 years at a compounded average return of 12% (reasonable I think) will yield P24 million.

5. Lower my taxes. I’ve already created a company partly as a tax shelter, so that should save me hundreds of thousands of pesos in personal income tax. Since I am not an employee, I shouldn’t be taxed like one. And with the BMBE tax exemption for small businesses, I only need to pay either a 3% percentage tax or a 12% VAT. Guess which category I’m in?

6. Sell our residential lot. Since we decided to live in another area, we won’t need the lot we purchased a few years ago. By now, we’ve built P1.4 million in equity, net of our mortgage balance (thanks to a 34% rise in market value). Minus capital gains tax, we should have a comfy P1.3 million in cash if we’re able to sell it. I can place that in an investment that can earn 15%, which translates to almost P200,000 a year in passive income. Add my P300,000 earned income and that should add half a million a year.

7 . Look into rental properties. Maybe it’s time I dip into investing in rental properties. At the very least, I should start doing some research into small (and therefore easier to rent out) condo or apartment units that can sell for a million or so and that I can rent out for P10,000 a month. If I can buy one property per year using leverage, I can at least offset part, if not all, of the monthly amortization and maintenance cost with rental income, and wait for the market value to rise.

8. Increase our net worth by another million. It is possible, though I have to really work my butt off. And God willing, if we can sell our property, that’s an instant million!

9. Increase our giving. We’ve proven that tithing works and we’ve given generously to our church’s building fund. But we are not yet at the point of being able to freely and generously give to others.

10. Teach others about managing their money. We’ve always said we are quite savvy when it comes to personal finances. But we know this is something we can and should share with others.

These are certainly ambitious but achievable goals. No one said it was going to be easy.