Louise and Dave's Blog

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07/01/2014

Setting Goals Together

In May, we sat down to write our top three goals. 

Louise’s were:

1. Pay off the 14K left on the van loan; 

2. Save 15K in an emergency savings account; and 

3. Start 529 (college savings) accounts for each of the kids and make monthly contributions. 

Dave’s goals were:

1. Remodel the bathroom (5K);

2. Take a trip to visit family in Hawaii (5K?); and 

3. Put in basement flooring (1K?). 

When I showed Dave my list he got mad and a little embarrassed — “my goals are ridiculous.  Yours are awesome.  My goals are short sighted and do not address any fundamentals.  It’s like putting gold siding on a shanty shack.” Meanwhile, I realized that my goals were really practical but Dave’s goals represented our family’s dreams.  Dreams aren’t ridiculous.  We talked about it and realized that we needed a plan that included both — build financial security and have some fun.   

Budgeting on paper

We slogged through our budget with our coach, Sherry Johnson, this past week.  We are still short in covering our usual expenses and as Sherry pointed out, we hadn’t put any money into the budget to cover our top 3 goals.  We’ve made a lot of cuts, but if we are going to meet our savings goals we need to find more money — through more cuts or more income. For now we plan to do a short cut for our savings.  We will put our school tuition money in our money market savings.  We’ll earn some interest and keep our savings liquid (compared to a short term certificate of deposit or CD).  Our school tuition savings can do double duty as our emergency fund.  We also plan to refinance the van loan to cut our interest rate.  

Our “big” pot of money gets divided into virtual envelopes

This week we started moving money from our general savings and checking accounts into our new sub-accounts.  Several years ago both of our vehicles were damaged in a hail storm.  We received checks from our insurance company to repair the damage.  We hadn’t fixed the cars, so every year the checks would expire and we would have to call the insurance company to get the checks reissued.  This year we finally fixed the Prius.  We haven’t fixed the van yet.  This past week, Dave deposited the insurance check for the van into our insurance sub-account.  We can schedule the repair at our convenience, the money is safe, and we won’t have to bother the insurance company again. 

Takeaway for the Week

What is more important than we realized: Having an honest talk about goals can be surprising.  Practical goals and big dreams are both worth pursuing.

What is easier than we thought:  By choosing a money market account, we found a way to save for our biggest expense (school tuition), and cover our emergency needs.

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