Monday, April 23, 2007

2007 Wealth Building Plans - Q1 Review

“He who fails to plan, plans to fail.” - Proverb quote

As a reminder, I have three financial goals for 2007:

1. Keep investment income to salary ratio >0.8.
2. Increase savings to salary ratio by 1.5.
3. Decrease debt to salary ratio by 0.1.

Here's how I have done versus my plans for Q1 2007. I have crossed out the items that have been completed. The red items are late. Blue items were completed ahead of time. Green items were added after the initial plan was developed.

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  • Send payment to pay down 4% of mortgage principal.

  • Make maximum 2007 IRA contribution.

  • Make maximum 529 plan contribution for college.

  • Meet with Financial Advisor to review investments status.

  • Consolidate tax records by end of month for April 15th filing. Get preliminary estimate of capital gains from stock investments.

  • Adjust automatic savings deposits to be 20% of salary.

  • Review stock selection model and invest in picks.

  • Allocate a portion of 401K to international funds.

  • Executor work - complete transfer of assets to trust.

  • February

  • Do first draft of 2006 tax return.

  • Make full year contribution to Church via appreciated stock. January

  • Executor work - complete getting basis for 2005 and 2006 returns.

  • Open up UTMA account for daughter.

  • March

  • Final draft of 2006 tax return.

  • Review Company retirement plan results.

  • Calculate Q1 Wealth Ratios.

  • Although not the investment results I wanted, I am satisfied with the completion of action items for March, 2007:-) During March, I decided to file an extension for my 2006 tax return since I owe taxes and wanted some more time to confirm the number. Of course, with an extension, I must still pay the expected taxes, which I did. In the review of my company retirement plan, I decided to increase my money market holdings slightly and continue to increase it as the company stock rises. I will be doing this to offset the risk of having most of my retirement account in company stock. (For reference, I have limited investment options at this time.) Finally, my analysis of Wealth Ratios for Q1 2007 showed virtually ZERO growth in my investments. This has caused me to rethink my retirement income strategy.

    My only outstanding task item in Q1 2007 is the executor work that I wanted to complete in January. Given the lighter task load in February and March, I thought I would complete the executor work in that month. The work is not difficult, but requires a lot of effort since new accounts need to be opened for each DRIP. Each new account requires the same information, but on their own documentation. This work continues to confirm my personal decision to avoid using DRIPs.

    Alas, not perfect, but pretty good progress. I will update progress on the remaining plans quarterly, since I had front loaded many of the activities into the first quarter.

    For more on Strategies and Plans , check back every Monday for a new segment.

    This is not financial advice. Please consult a professional advisor.

    Copyright © 2007 Achievement Catalyst, LLC

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