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10/14/2014

The finer points of setting goals

When we started Project Money our number one goal was to pay off our $14 K van loan.  Then we got busy tracking and cutting our spending.  We set up sub accounts for planned expenses and started to fund them every month.  We’ve been really successful funding our sub accounts to cover future expected expenses.  For example, in December and January all of our big insurance premiums are due.  This year we already have the money we need for Christmas and for the insurance payments in separate sub-accounts.  

But what about that van loan?  Our coach Sherry asked us to set a new goal.  She pointed out that we had taken a step backward.  Before PM we were paying $580-600 a month on the loan.  After refinancing the monthly payment went down to $420, and we put the extra money into our sub accounts and not the loan.  The van loan is still charging us 2.29% interest, and the money in our sub accounts is earning only about 0.13-0.15% interest.  

We went home and thought about it.  At first it felt kind of bad, like our team didn’t understand how hard it is to live with the uncertainty of cancer — that setting goals feels bad when we don’t meet the goals.  But Dave’s cancer is more stable.  And a big part of why we are doing Project Money was for us to learn that we could set goals again.  Living without the goals hadn’t made us happier.  It made us feel like we were stuck.  And when we were stuck we were much more likely to spend for short term pleasures (ie:  trips to Costco and eating at Noodles) then take the long-term view and save.

Soooooo, we have set a new plan of paying off the van loan by December 2015.  How are we going to get there?  Currently we owe $12,878.50 on the loan.

We have budgeted $420.58/month for the next 3 months = $1261.74  

At the beginning of October, we had $4231.45 in my flex spending health and dependent care accounts.  This week I submitted reimbursements for $3984.98.   We should have receipts next month that will allow us to withdraw the remainder of the account.  

We expect to get $350 in wellness reimbursements through our health insurance by the end of the year.  We should get another $150 back in early 2015.  

Everyone who participates in Project Money receives $2500.  We have decided to put $1000 towards our van loan. 

Total payments to van loan:  $1261.74 + $4231.45 + $500 + $1000 = $6993.19 

Loan balance:  $12,878.50 - $6993.19 = $5885.31

To meet our goal, we will need to pay $491 a month in 2015 to pay off the balance by December 2015.  We are pretty confident we can meet that goal.  If we get extra funds, we are committed to using the money to make extra payments against the principle.  

Takeaway for the Week

What is more important than we realized:   We have to set financial goals so we know what we are working toward.  Setting goals can be stressful.  Talk it through.  It’s okay to change goals.  We realize we need to be happy even if our progress towards our goals seems very incremental (ie:  sometimes it may seem like a drop in the bucket.  But every drop adds up.  So don’t get discouraged).  

What is easier than we thought:  If you have registered for the Summit Estate planning conference on Oct. 14th, don’t forget to attend. 

Comments

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I am a planner and really enjoy seeing how you've planned to accomplish your goal by December 2015 and are recognizing that every drop counts!

I really liked how you broke down how you will achieve your goal of paying off your car loan. It always helps when a plan is laid out and you can achieve milestones along the way. Good luck!

It is very important to revisit your budget often and make necessary adjustments. Wikipedia says: A budget is a quantitative expression of a plan for a defined period of time. It may include planned sales volumes and revenues, resource quantities, costs and expenses, assets, liabilities and cash flows. It expresses strategic plans of business units, organizations, activities or events in measurable terms. Nowhere in the definition does it state your goal is etched in stone. When “life” happens you just need to figure out and adjust accordingly. I’m proud that Louise and Dave where able to come up with a plan that suits them and their family!

One of our biggest take-aways is this isn't a sprint - it's a marathon. One day at a time and remember winning the big prize would be really cool but just learning and refocusing on financial health is worth it's weight in gold :)

Good day everyone, I am Josephine Alex by name, i am from of new york USA, i have been looking forward for a genuine loan company for the past 2 months and all i got was group of scams who made me to trust them and at the end of the day, they duped me of $2000 without giving anything in return, all my hope was lost, i got confused and frustrated,i find it very difficult to feed my family, i never wanted to have anything to do with loan companies online again, because i never trusted any loan company again since i was scammed, so i went to borrow some money from a friend, i told him all that happened and he said he can help me, that he knows a loan company that can help me, that he just got a loan from them, he directed me on how to apply for the loan, i did as he told me, i applied, though i never believed but i tried and to my greatest surprise my loan was granted to me within 24 hours, i could not believe, i am happy and rich again and i am thanking God that upon this scams all over the places a genuine company like this still exist, please i advise everyone out there who are in need of loan and can be reliable, trusted and capable of paying back at the due time of funds to contact (joshualim_loan@yahoo.com.sg ) and be free from scams on the internet. they will never disappoint you.

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