Setting goals can seem difficult, but their importance cannot be overstated. I've been setting goals my entire adult life. I remember setting some of my first long-term goals all the way back in the summer before my freshman year of high school. I've relied on goals to guide my decisions for many years. This simple act of setting a goal might not be enough to prompt action though, so here's how I handled my goals throughout 2019.
In 2019, my financial goals were very simple. I only held a real job for a little over a year and a half, and I was just starting to actually track my finances and take a look within myself to try and decide where I wanted my life to be, and what would be realistic for me to achieve. So, for 2019, my goals were simply to purchase my first investment property, and pay for our wedding and honeymoon. Both very simple and straightforward.
I knew that if my wife and I saved diligently enough, then we would be able to save enough for our dream wedding, without compromising. We started saving for our wedding in a high interest savings account with Ally in 2018, and we don't generally spend much money on anything. We both drive very modest cars that have been paid off for years. We live well below our means in a small apartment in a blue-collar neighborhood, and we travel almost exclusively with points that I earn through work. However, the one thing we absolutely wanted to splurge on was our wedding. A wedding is a terrible financial investment, but it's a once in a lifetime experience that we wanted to enjoy with all of our family and friends. The reason my wife and I strive for financial freedoms is so we can enjoy the special moments life offers. We can always find a nicer, bigger, house, or upgrade to a newer car. We'll never be able to go back and have another dream wedding.
The high cost of our wedding did make it a little more difficult to achieve my next goal. I have been following BiggerPockets, and listening to their podcast regularly for a little over a year, and I understand and believe in the power of real estate as a tool to increase earnings and net worth, so I decided that I needed to get in the game. Ideally, I wanted to find a property with at least an 8% annual return, but I needed the experience bad enough that I would have settled for just about anything that was cashflow positive. Through listening to all of the guests on the BiggerPockets podcast, I realized that the first property never made anyone rich. In fact, many guests on the podcast noted that their first deal was an absolute nightmare that cost them much more than they got in return. The one thing they did all have in common though, is that they persisted through the challenges to amass enough equity to build a substantial net worth. In 2019, I wanted to prove to myself that I had the determination to persist through those same challenges in order to be successful.
The hardest part about having a large goal, like buying an investment property, is that I couldn't directly act on it each day. For me, it was largely dependent on saving up enough money (which took time), and finding a property with cashflow. Setting yearly goals are great, because they afford enough time to make meaningful change, but it's easy to lose sight of a yearly goal, because a year is such a long time. That's why I like to break down my yearly goals into monthly action items. Each month, I lay out exactly what I need to achieve in order to get closer to achieving my yearly goal. A month seems to be the perfect amount of time to achieve each action item. It's short enough, that I need to be diligent and work hard to get through each task, but just long enough that if I have a bad day, or rough week, then my entire month isn't ruined.
Even though I couldn't buy an investment property each month, I was able to take actionable steps that would get me closer to that goal, or help me to make the property successful. Here's a breakdown of what my goals looked like each month.
- January: Identify savings goals for property and confirm savings for wedding. Find potential areas to purchase investment property
- February: Set up search criteria to automatically identify properties in my price range and desired area
- March: Contact realtor to set up showing at potential property. Communicate desire to buy property in 2019. Find 0% interest credit card for potential wedding expenses over budget.
- April: Contact people I know with rentals to talk through the process of being a landlord. Order and start reading at least 2 books on managing rental properties. Finalize vendor details for wedding.
- May: No investment property goals. Focus on celebrating wedding, and wife's birthday.
- June: Set up rental company in anticipation of buying a property in the near future.
- July: Establish mastermind group to maintain accountability
- August: Analyze potential deals weekly. Finish rehabbing current home so it is rent ready.
- September: Close on first investment property! Yearly goal complete. Start maxing out 401k and HSA (I should have been doing this sooner, but I didn't realize the power of it until talking to my financial advisor).
- October: Maintenance upkeep on investment property. Setup blog.
- November: Post 4 times in Millennial Debt Doctor.
- December: Identify 2020 goals and map out plan to achieve them
It looks like a lot of information, but if you think about accomplishing each item over a 30 day span, it really is quite manageable. Just the simple act of defining my financial goal for 2019, and breaking it down into actionable steps each month provided me with an excellent sense of direction and accomplishment. It was easy for me to look back each month and see what I did well, where I needed to improve, and what I needed to do the next month to continue progressing towards my yearly goal. I can't overstate how happy I am to have completed my 2019 goals, and how excited I am for 2020. It's so uplifting to be able to identify where I want my life to go and develop a track to find a way to get there. Will everything go according to plan? Of course not. There will definitely be challenges ahead, but if I continue to break things down into actionable steps, I know I will be able to achieve my larger financial goals.