I’ve Paid For This Twice Already…

Archive for the ‘goals’ Category

After our series of unfortunate events, we’ve been thinking about what our 2009 financial goals are and how debt elimination factors into that.  Although I planned (and pre-wrote) a 2009 goals post for today, the last day of 2009, the events of the past week and a half has made that largely irrelevant.  I’ll be working on goals for 2009 over the coming days but these are some of the things that have factored into our thinking:

1.  The car.  Oh what can I say about the car that hasn’t been said.  It is, in fact, supposedly fixed right now.  I say supposedly because I have about zero trust in that car.  But the Saturn dealer seems completely secure and convinced of their diagnosing and fixing the problem, and my bitter email to Saturn about how much I hate the car prompted them to wave all diagnostic fees.  My spouse (and my inlaws working in concert) will get the car to Indiana on Friday, I hope.  As long as it is really fixed.

So because I have zero trust in the car, we’re looking at replacing it possibly before we originally planned.  The original idea was that once we’re out of non-mortgage debt, we’d start saving aggressively for a new car as part of the emergency fund, and depending on what happened with the car, get another once we’d both saved a 6 month expenses emergency fund plus enough for a semi-used car (budget, about $10000-$15000).  But this car may not make it that long, because I think that is about 2 to 4 years out.  So, we may be scaling back the aggressive debt elimination we’ve been doing and start building the emergency fund - just in case.  Which leads to…

2.  The emergency fund.  Right now, the emergency fund is $300.  It was $1000 before all this happened but it has had to help out with all the towing, car renting, etc.  Some of that $700 is still in my checking account unspent,  and after the car is back here I’ll figure out exactly how much and move it back to savings.  But $1000 doesn’t feel like enough anymore.  It never did feel like enough for the long term, but now it is not enough even for the short term.  We’re still discussing what we’re going to change to, and the current idea is $2500.  Maybe even $5000.  This will be bumped up the priority chain above my student loan.  Speaking of which…

3.   Debt elimination.  My student loan, still at slightly over $10000.  I want to keep paying it down aggressively, but that may have to just be put on hold.  We may decide a fixed minimum amount to pay to it while trying to deal with the rest of life - my gut says $300 per month which is a little more than twice the minimum.  It won’t get rid of it very fast, but it will bump the schedule up much more than the 2017 that it is due by.  Once other things are sorted out we would go back to aggressively paying it off.  Because I want to try and avoid creating…

4.  New debt.  We may have to take our a car loan.   I am sincerely hoping not.  But I have to responsibly look at the possibility (versus continuing to dump money into a car that will just find new things to break).  Could we become a one car family?  Yes.  But not with my spouse’s car.  Becoming a one car family in a place of very little public transportation and a dual working household would necessitate more driving with the one car that we do with both cars combined right now.  Instead of putting about 20,000 miles per year on both cars combined, we’d probably put 30,000 a year on the one car.  I love the Corolla but a 13 year old car with 200000+ miles on it that already burns through oil at a higher than necessary rate already is just going to be run into the ground in a short period of time by all the driving.  I like the Corolla.  I don’t want to kill it.

So we may have to get a car loan for a new (to us) car.  We’ll see how the Saturn does coming home from NY.  If we can put it off for another two years, than we might not have to take out a loan at all.  But - I refuse to keep dumping money into that money pit of a car.  One more major problem and I think I’m done.

So, a lot of things swirling around my head right now.  In my heart, getting rid of our last non-mortgage debt is still my #1 priority, but my head says be cautious and prepare for the inevitable while you still can.  But there will definately be debt elimination in 2009 - hopefully all of it.    Here’s to 2009 improving vastly over 2008!

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June was an interesting month.  Although I did not get majorly off track with my financial goals, I let a lot of things slide, and I *felt* like I was off track and losing focus.   And when I feel like that, it is easy to let myself slide a little more and a little more until I become completely set back.  This didn’t happen, because by the time July rolled around I realized what was happening and made some changes to get refocused and ready to move forward.  If you start to feel off track with your goals, here are five things I did that helped me to get right back on track.

1.  Keep records.  Looking at my budget sheet was the easiest way for me to see where things were going off kilter and come up with ways to correct it.  Between visitors and medical procedures in June, it was easy to not keep track of what we were spending, but I did keep receipts and eventually sat down and caught everything up on my budget worksheet.  Then I could look at what we had and where we were and explore ways to get us back on the right track.

2.  Reassess your goals.  This is not to say that your goals need to be changed.  rather, reassessing your goals puts you back in touch with them and reminds you why you have them in the first place.  A goal that you are invested in is a goal you’re more likely to care about meeting.

3.  Remind yourself that a setback is not cause for failure.  In the past, once I got off track I used that as an excuse to continue to be off track and get further and further away from my original intention.  This time, instead of saying “Oh, well, I’ve already X so why don’t I just Y” I looked forward to where I wanted to be and used that as motivation not to go further off track.

4.  Take small positive steps in the right direction.  Sometimes, we just need a little nudge.  Taking small positive steps to get back on track - like making an extra snowflake - can get us refocused and back on task.

5.  When all else fails, institute a 5 day spending freeze.  Sometimes a shock to the system is what is needed.  If you need a drastic measure to jolt you back to reality, institute a spending freeze.  get yourself out of the habit of spending money without thinking about it.  Think about everything.

Hopefully, you’ve stayed on course with your financial goals, but I know it is easy to slip a little, and the key is to not let a little slip become a huge landslide.  And even if it becomes a landslide - you can pick up and move forward.  Don’t let a misstep completely derail your plans and goals for the future.

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Setting a goal can be an empowering thing. The simple act of deciding on a course of action and planning a way to accomplish it can do wonders for motivation and cause significant forward progress in an area that may have been stagnating. But sometimes we outgrow our goals, or they outgrow us, before they’re accomplished, and recognizing that fact may save us from being held back by the very things that are designed to push us forward. Some goals are short term things and don’t need deep re-examination, but some can take a long time and can’t be simply put on auto-pilot once set. If we set goals and then never re-evaluate them, they can actually work in the wrong direction and hold us back from accomplishing what we can, if we only strive to meet our goals.

Sometimes we get so focused on accomplishing our goals that we don’t take the time to really evaluate if they are still appropriate over time. Some become too ambitious as we encounter setbacks, and some become too simple and mundane. A periodic reflection on what our long term goals are and what path it will take to accomplish them will help to determine if our goals fit us now as well as they did when we first set them.

Three ways to keep our goals relevant to our present include:

1. Periodically review your goals. This goes without saying, but it amazing how many things can become comfortable and on auto-pilot if we let them. Set it and forget it doesn’t work for goals.

2. Set a benchmark for how automatic a goal becomes. For debt reduction, I use something I call the debt crossover point as my standard for how easy my debt reduction goal date is to reach. Simply put, the debt crossover point is the point where my minimum monthly debt snowball payment alone, no extra snowflaking, will allow me to reach my goal date of all non-mortgage debt eliminated by December 2010. Once I reach that point, I know my goal date needs to be revised and shortened, because it leaves nothing extra to strive for beyond paying the budgeted minimum. My aim is to be constantly on the lookout for snowflaking opportunities, and for that I need a goal that is motivating.

3. Find a balance between shooting for the stars and staying on the ground. This is almost the most critical, and the hardest to keep in balance. With the inevitable highs and lows of any path to a goal, it is hard to know when a high is high enough to warrant revising a goal, or a low is low enough that a change is warranted. Goals should push us, but be realistic enough to be able to be accomplished with focus and effort.

When’s the last time you re-evaluated your goals? Are they due for a mid-year tuneup? Stay in tune with your hopes and dreams yet temper them with reality - give your goals a good soul searching today and make sure they still reflect your life’s path.

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Now that we’ve settled on my spouse’s student loan as the next serious debt reduction target, it is time to set some goals related to how we want to accomplish that. The student loan is our highest interest rate debt left, at 9%, so for us we feel it makes sense to attack it next with intensity.

First - the basics on how much money is budgeted available. Our debt snowball is $810.41, and that includes the minimum payments on both student loans plus the car loan, as well as another $200 that previously went to the credit card. Now that the credit card is paid off, that $200 gets moved automatically towards paying off the student loan. Added to the minimum payment on the student loan ($237.59) that makes at the very least, $437.59 available every month to reduce the student loan.

Of course, I look to the snowflakes to help me here. I think, based on past performance, it is reasonable to shoot for an extra $300 per month added to that total through snowflakes, be it through selling things, tutoring, blog revenue, surveys, or a combination of those. That brings the total target per month to the student loan debt to $737.59. According to the snowball calculator, if that is obtained from March to December, in December we should have a bit over $5000 left on the student loan, and the remainder would be paid off by June 2009. This forms the basis of my goal. I am aiming to have the student loan be under $5000 by the end of 2008.

I could set the bar a little higher, but because I need to also save for my wisdom teeth removal, I want to play it a little bit conservatively. If I could manage to earn enough snowflakes to consistently pay $700 more than the budgeted paydown amount (so $1137.59 total per month) then I could actually pay off the entire student loan this year. I don’t think that likely, but it is of course possible. I’ll keep that as a sort of “dream goal”, but it is a little too far out of reach to even label a stretch goal.

But June 2009 for elimination, if we can reach that, would be a great thing regardless. On with the debt paydown!

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On Tuesday Glblguy at Gather Little By Little checked in with his 2008 goals and then asked three other bloggers to do the same, me being one of them. He asked specifically about my #1 priority goal: No More Credit Card Debt.

So, how am I doing? Well, the good news is that I am certain that before the end of 2008, I will have eliminated all my current credit card debt. In fact, I am pretty sure that will happen before the end of February. Between the time I posted my #1 goal at the end of November and today, I have reduced my credit card debt from $3144.20 to $955.17, which is amazing progress. Over $2000 down in just two months! Looking at that really inspires me to keep going and get the job done.

The flip side to that is I didn’t accomplish much of that goal in 2008. After I wrote that post, my family had a number of positive and unexpected financial gifts or occurances fall into our lap - from my spouse’s father related to an inheritance he got, a property tax refund, and cash gifts at Christmas time. At the end of 2007, our credit card debt stood at $175.17, and I was sure that we would make short work of that.

But, as is bound to happen, what goes up must come down. We committed the vast majority of our resources to debt reduction, and then, on January 2nd, 2008, my spouse called me from the side of the road because my car, which he was driving that day, had completely stopped working. An engine replacement later, and not only had we increased our credit card debt by $800 (through a 0% for 3 months financing offer) but we had also spent about $2700 out of our pockets, all the emergency and other funds we could come up with. Just barely into 2008 and we were already farther away from our goal than when 2008 had started.

By the way Saturn, I’m still not impressed that a car with less than 88,000 miles needed a complete engine replacement, and I’ll be discussing that further in the future as you continue to deny any responsibility for your faulty part. But, that’s your perogative to not stand behind your products. Don’t think I haven’t noticed.

But back to the topic at hand, we will still accomplish our no credit card debt goal in 2008. I won’t count chickens before their hatched, so I can’t guarantee that it will happen next week or next month. But I am planning for us to be out of credit card debt in February. Since my original goal was August - I think that we are still doing pretty well for ourselves. Especially if we can hit that goal, do a victory dance, and then start aggressively building back up our emergency funds before the next little speed bump comes along.

Thanks Glblguy, for interjecting some perspective in my life by making me look back at that goal post. I needed that!

And in the spirit of giving, I’ll ask three more bloggers who set goals in that same carnival to check in with their progress (and feel free to leave a comment of your own with your goal progress!) :

• Good Fountain: How’s the eating out? What about the spending?
• BeThisWay: Budgeting, Accounting, Paying Oneself First, Oh My! How’s it going?
• Remodeling This Life: Snowflaking to an emergency fund! What’s the status?

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