A Quick Story  Abe Walker wanted to buy a powerboat so his family could spend their summers water skiing at the lake near his house. But while Walker didn’t have a lot of extra cash, he was just two payments away from paying off his car. After paying off his car, Walker continued to make those $300 payments each month into his savings account. He never faltered. By the next June, he had enough to make a downpayment on a boat, and was able to continue making payments using the money he had previously allotted towards his car.  Short-Term Goals  Short term goals are generally defined as those that may be achieved in one year or less, like Mr. Walker’s boat. In order to meet this type of goal, try these three strategies:  

• Cut expenses to create more discretionary income

• Set aside a certain amount of money each month

• Invest in short-term vehicles where you may access assets quickly

       Prioritizing Goals     The problem with short-term goals is that there are generally too many. Some      of you goals might be to pay off your credit cards, save for a home or car down payment, save for a dream vacation or even holiday expenses. In this case, it’s important to prioritize your goals to help ensure that the most important ones are met first.

Savings Strategies  

• Pay yourself first. After the mortgage and utilities but long before the pizza and videos, write a check out for the same amount each month and deposit it into your savings or short-term investment account.

• Continue making payments. Say you just paid off your car; continue making the same payments each month, only now deposit them in your savings account before the money gets spent elsewhere.

• W-2 withholdings. If you generally receive a large tax refund at the end of the year, your employer is probably withholding too much from your paycheck. Reduce your deductions and put the pay increase directly into an interest bearing account to help save towards your goal.

  Investment Selection  For short-term goals, fixed rate investments are your best choice. These guarantee to pay a certain amount of interest on your deposit as long as you maintain your investment for the specified period of time. Treasury bills. They are issued by the U.S. government and backed by its full faith and credit. Treasury bills have a maturity of one year or less and are exempt from state and local taxes. Certificate of deposits (CDs). Short- or medium-term, interest-bearing, FDIC-insured debt instrument offered by banks and savings and loans; features low risk, low return, and an early withdrawal penalty. Money market accounts. Short-term debt securities, such as banker’s acceptances, commercial paper, negotiable certificates of deposit, and Treasury Bills, with a maturity ranging from 30 days to one year.

The Horror Story For Parents  In 2001, the average annual cost for a four-year education at a private college or university is $114,488; $58,495 for a public college. By 2017, those costs are estimated to increase to $298,243 and $148,420. Paying for college tuition is a big concern for many Americans. According to a study by Louis Harris and Associates, eighty percent of parents polled stated that they would give up their vacations to save for college. Seventy nine percent said they would work overtime or even work a second job to help pay tuition costs. Paying for your child’s college education is a long-term goal many people share. Long-term goals are generally defined as those that can be achieved over your lifetime. They are best facilitated by:  o       Adopting a practical lifestyle that stays within your means o       Investing the same amount of money each month o       Investment education to instill the confidence to weather periods of market decline o       The discipline to continue investing regularly even when share prices drop  Long-Term Goals  Most people have fewer long-term goals but they are lofty in size and require disciplined commitment. For example: 

• Paying for children’s college education

• Funding a long and active retirement

   Investing Strategies  

• Dollar cost average–invest the same amount of money each month, buying more shares when prices are low and fewer shares when prices are up; results in a lower cost per share over time.

• Diversify–spread your money across many different securities, increasing your chances that one or more of the securities will perform well at any given time–and minimizing your risk.

• Asset Allocation–approximately 91% of your investment portfolio’s performance is determined by how your assets are allocated, so it’s important to allocate your money across different asset classes, such as stocks, bonds, and cash–as opposed to simply diversifying holdings within one particular asset class.

  Investment Selection  With long-term goals, you can be more aggressive in where you invest your money, since there will be time to recoup any losses and take advantage of bargain buying during down markets. The following are your basic choices:  Stocks–represent ownership in a company, and generally offer the best growth opportunities over the long term Bonds–represent your loan to a government or corporation, and generally offer steady, fixed income Cash–represented by short-term instruments, providing more downside protection for your investment but less opportunity for growth As a general rule, riskier investments offer higher returns. However, by investing in all three categories, you combine riskier investments (stocks), with moderate-risk investments (bonds), and low-risk investments (cash). This strategy maximizes your return potential while minimizing your overall investment risk. As a general rule, riskier investments offer higher returns. However, by investing in all three categories, you combine riskier investments (stocks), with moderate-risk investments (bonds), and low-risk investments (cash). This strategy maximizes your return potential while minimizing your overall investment risk.

                         Goal Formulation Worksheet–Two Step Process

Step One:  Write down the goals that you would like to achieve during the next three years.1.

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Goal Formulation Worksheet–Two Step Process

Step Two:The following worksheet will help you form a specific plan to help you achieve your goals.From the list of goals you just made, pick the four most important short and long-term goals that you want to accomplish. Make these goals as specific, measurable, and provable as possible (so you will know exactly what you’re aiming for and when you’ve achieved it).

1. Identify what immediate action you can take within the next 48 hours to take your first step.
2. Think of six steps to take to further your action plan.
3. Determine the date you would like to achieve this goal.

NOTES

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As a Realtor and consultant, I find that by having your destination marked it’s easier to get on the road to home ownership.  Here’s a brief lesson on how to obtain your Financial goals.  These goals are different from values; financial goals are tangible, measurable items that you can begin to tackle today.  You can figure out how to achieve them. And once you determine your goals, you need an action plan to make them a reality.

Goal Setting: Step By StepThere is no right way to establish financial goals. However, our goal setting worksheet and these steps will definitely help you get started:

1. Determine your short-term goals. Think about what you’d like to achieve in the next three years (buy a house, pay off credit cards, save $100 a month into an investment account).
2. Determine your long-term goals. Decide what you’d like to achieve in ten years or more (pay off mortgage, retire at age 50, buy a second home). In some cases, your short-term goals will help you achieve your long-term goals.
3. Make your goals specific. They should be concrete and measurable. For example, “I want to be rich when I retire” could become, “I want to be able to spend $5,000 a year for travel after I retire at age 65.”
4. Make your goals actionable. What specific steps will you take to achieve your goal? Perhaps contributing more to your 401(k) plan or bringing lunch to work instead of buying it. Whatever your goal may be–it needs an action plan to make it a reality.
5. Take action immediately. Even by just making a phone call or looking up information, your goals will feel more real and reachable.
6. Make a list of your goals, review it often and share it with family and friends. Constant reinforcement and support are invaluable to achieving your goals.
7. Don’t give up. If things don’t happen as you originally planned, then just redefine your goal or action plan.

Being a resident and a Broker associate in South San Jose for more than 10 years now, I wanted to connect with other residents to find a common thread and help one another with pairing up ones needs with anothers ability to help. 

I’m making my blog open to the residents of these selected areas to comment and gain a better sense of community among those that live in the best pocket neighborhoods along Santa Teresa Foothills.

I’ll do my best in providing a forum of real estate wants and needs and community values, as well as homeowner information and updated tax laws you can benefit from.  I lso do a lot of volunteering in my spare time, and want to share of many upcoming events and ways in which you can fill a need for your fellow neighbor.

Write to me with you real estate questions South San Jose, I’m ready to help!

If you are a resident and would like to provide a solution, or volunteer in your own neighborhood, blog it out!