Wednesday, July 26, 2017

Goal Posts: Winning with Short, Medium, and Long-term Goals

 I'm not much of a sports fan.  There!  I admitted it!  But, I do know enough about sports to understand that there is always a goal.  Hitting a home run.  Sliding into home plate.  Kicking the ball through the goal posts.  Reaching the finish line before all the other runners.  Touching your opponent as they "dodge, thrust, and parry."  Check out one of my favorite Looney Tunes cartoon clips in which the words, "dodge, thrust, parry" are prominently featured.  In today's post we'll talk about "Goal Posts:  Winning the Game with Short, Medium, and Long-term Goals." 

What are short, medium, and long term goals and why are they so important?  I find people all the time who believe that if they have money left over at the end of the month, that they are living on a budget.  I get it.  I once did too!  For many years, I felt that we were "beating the system" just by being smart enough to spend less than we made.  Wasn't that good enough?  Nope.  Not really.  Here's why.  We had one, great, big pile of glorious green cash with no specific job for it to do.  That's a temptation worthy of taking down even a world champion "no spender".   It was the first big mistake I made with money.  I write about it here.   

When you are already living lean, there is a huge temptation to give into a Spirit of fear and say, "I barely afford to live from month to month.  There is NO way that I will ever have enough money to save for any future goals."  But, sticking your head in the sand and hoping that disaster will never strike is a very ineffective strategy.  Your Great Grandma had a "rainy day" fund because she knew that hard days eventually come and it's best to have an "umbrella"handy for inclement financial weather.   In Matthew 5:45 the Bible says that "it rains on the righteous and the unrighteous."  In other words, no matter who you are or how much you love and serve God, eventually ALL of us go through trying times.  

What is the statistical probability that one day in the not-so-distant future you will face an emergency?  Think about it.  Will your water heater leak all over your basement floor?  Will your 20 year old washer bite the dust?  Will your car refuse to start?  Will you open your back door to find your husband's head bleeding profusely?  Will your 18 month old son slash open his forehead while falling off of a chair?   Will your 15 year old run into the garage door while you are teaching him to drive?  (See here for that story!)  ALL of these things have happened to us in our 29 years of marriage.  They were emergencies.  They could not be predicted! 


That's why an emergency fund of $1000 is the first short-term goal of financial planning.   If you don't have an emergency fund, make it your number ONE priority!  Eventually you'll want to expand it to 3 to 6 months of living expenses.  Work extra hours, sell some possessions, or downsize areas of your monthly budget in order to get your emergency fund in place.  If you don't have a monthly budget, go here.  Everydollar is free and I use it every single month.  After you have amassed your $1000 emergency fund, DON'T TOUCH IT!!  It's like those glass cases that say, "Break in case of emergency."  But, be certain that it is truly an emergency before you smash and grab that cash.  Vacation is not an emergency.  A dinner party is not an emergency.  A new couch is not an emergency.  Even your best friend's destination wedding is not an emergency.  You get the idea. 

Even if you are in credit card debt, you should save your $1000 emergency fund BEFORE you begin paying down those cards.  Tackling all outstanding credit card debt should be your next step.  When I say tackling debt, I mean running it over like football players run full force into each other when trying to score a touchdown.  Grab that "debt free ball" and don't let anyone or anything get in your way!  Dodge, Thrust, Parry, Spin!  I recommend following Dave Ramsey's "7 Baby Steps to To Financial Peace".  If you've never taken a Financial Peace University class, I recommend taking this class too.  


Next, consider medium-term goals.  I generally consider this category to include goals with a 2-5 year time frame.  Will your child need braces?  Larry and I should get a serious "multi-child discount" in this arena.  Do you have a child graduating from high school?  We just did this and the cost of celebrations and graduation fees add up fast.  Will you need to replace a car?  We will need to do this again in just a few months.  Are the mountains of Colorado beckoning you to visit them, once again?  Don't give into this siren song unless you've saved up for that vacation.  


Long-term goals generally involve home-improvement projects or retirement and are 5 years or more in the future.  Is there an inverse relationship between the bulging wall of your downstairs shower stall and the amount of duct tape holding it together?  (Don't make me attach a photo!  It's really ugly!!  But, it will stay ugly until we have enough money to replace it.)  Has your spouse begun to measure retirement by the number of months until he can reach this goal?  What about about college tuition?  We don't do it!  That's right.  Our children have known since they were toddlers that we give them $2000 towards college upon completion of high school and they are responsible for all the rest.  Read here for our plan for a debt-free college experience.  

The final step is to track each of these goals.   Everydollar has a section on your monthly budget to allow you to set a goal.  You tell Everydollar what your savings goal is, how much you already have set aside for that goal, and then every month you allot a certain amount to be added to each goal.  Everydollar does the math for you!  I can tell Larry in about 30 seconds how much money we have available for that new car.  Here's another option.  Being a visual person, at times I have made pie charts showing how much money we are putting toward each of  our goals and added the date by which I thought we would be able to reach each one.  I color coded them.  They were pretty cool!   Big "countdown" thermometers drawn on posterboard are also very effective.  On the first day of every month, your kids can have the job of coloring in the amount you saved toward the goal.  Use whatever visual aid you need for reaching your specific goals.  Keep that goal in front of your face every single month!  

Here are today's "takeaways": 

Life happens!  So, planning for future goals should not be considered as an option.  Planning to fail begins with failing to plan.  Begin with $1000 emergency fund.  Then, pay off all credit card debt.  Finally, list medium and long-term goals in order of importance and devise a way track your progress on these goals.   

Until next time, 

Remember, do all to the glory of God, 


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