subscribe to the RSS Feed

Tuesday, July 29, 2014

My 2014 Target

Posted by Tim Stobbs on January 20, 2014

That’s it…I’m flushing any goals for my retirement plan for this year.  Not one single goal…instead I’m planning a rough target of contributing $50,000 to our various investments.  Why only a rough amount?  Because I already have a longer term target of hitting $350,000 by Jan 1, 2016.  So if I increase my investment net worth by about $50,000 in 2014, I should be well on my way to my longer term target (which again is completely picked out of thin air).

You see I’ve hit the point in my savings routine where I no longer have to try all that hard to do it.  I’m just used to saving a lot of money and not spending a whole lot.  Also I’m not particularly interested in trying to save more.  I’m happy with our current savings rate and I rather focus my energies on other projects.

Although I have to admit that my overly analytical brain really likes having targets of some kind to gauge my progress…hence a rough target for the year.  I’m giving a little ground here to prevent part of my personality from having a crying fit over having no numbers to look at.

Would I recommend this idea for most people? Certainty not.  It’s that making me a wee bit of a hypocrite? Yes, I can see that point of view, but you have to recall I’ve been at this saving for retirement aggressively for over seven years now.   For me saving is so ingrained into me now that spending my full salary in a given year is nearly incomprehensible.

When you are starting out I would map the goals right down to a given month.  You need that goals that detailed because it is very easy to fall off the wagon.  So having a monthly goal and then meeting it gives you a little rush which is helpful to keep you motivated.  At month number 85, it ceases to be helpful, now it is merely a habit.

Do you bother with yearly goals?  Or do you prefer monthly?  Why?

2013 Goal Update

Posted by Tim Stobbs on December 19, 2013

Could you save an average of $4000 a month for an entire year?  In effect, that was my goal for 2013 when I set a target of $48,000 in contributions.  Yet given we had plans for our month long vacation and my wife’s trip back out to Gander, NL to see her baby niece it was bound to be a significant challenge to achieve that goal.

Yet now that there are only a few days left in the month I can say I’m so close to making it that I can smell it.  Yet I confess that I might end up just a little bit short, I’m not 100% sure yet.  The last $500 or so might not actually happen.  So let’s assume for the moment I do miss that last $500, what happens?

Not much of anything to be honest.  The goal was entirely just based on my estimated cash flows for the year, so the reality is if I miss it by $500 or 1% I’m not really freaking out.  After all trying to hit that precise of a target that far out with so much variability in life, I could live with failure if that is what it looks like.

You see some goals are precise and have no grey zone around them.  For athletes you often just either win or lose,  there really isn’t much else.  No one recalls who loses the big game in a few years time.  Yet other goals like my savings target are lines in the sand.  They exist only to help steer me in the right direction, but I still can win the war even if I lose this particular battle.

On a similar note I’m going to be over budget in our Christmas shopping for the first time in a decade by a whole $90.  I failed to meet another target, but then again was it a reasonable budget to begin with…looking back I don’t think so.  We missed one person entirely we would have to buy for, so we didn’t have enough slack in our other spending to cover it.

The point is when saving for something that takes decades it is ok to fail at some of your interim goals.  Frankly I would be shocked is anyone met all their goals all the time, as it would indicate to me the goals are too easy.  Failure is part of life, without the risk of missing a goal you don’t have anything to push yourself with.  So get comfortable with failure, take it as an opportunity to learn from your mistakes, but also don’t forget to celebrate your successes too.

How do you handle failing to meet a goal?  Or how do you celebrate when you achieve one?

Paying for Pain

Posted by Tim Stobbs on September 5, 2013

I recently spent $50 to enter the 3 Day Novel writing contest, which is basically a self inflicted version of metal torture to write as much as you can on a novel in three days over the September long weekend.  I will not lie to anyone because the experience sucks while you are doing it.  This year was particularly bad since I got sick about halfway through the weekend which added a version of physical pain to the entire process.  So why did I pay $50 to go through this level of pain?

To be honest, it is all about the results.  I have had an idea for a fiction book in my head for at least a year and I never devoted much time to developing it.  So now in three days I have a complete first draft that is 92 pages long.  Not a full novel, but a bloody good start on the project.  In a nut shell I used an Ulysses contract on myself, which is where you bind your future self to a particular action.

In my case, I told some co-workers, family members and paid money to do this so it gave me a lot of motivation to ensure I went through with my plan to devote three days to just writing (with the notable exception of going out for my anniversary supper with my wife…I was getting out of that only if I was dead).  The idea works very well for all sorts of goals regardless of they are personal, physical or even savings goals.

So this where I think a lot of people enjoy writing a personal finance blog.  You get input from people on your ideas and also often state certain public goals (either short or long term).  In effect, you are doing Ulysses contracts by publicly stating your goals and then having to explain why you completed them or not.  It’s easy to ignore a goal when no knows about it, it a lot harder when just about everyone you know is aware of it and asking about it.  Yet to really add a level of commitment to a goal you should also consider adding a monetary element.  For example, if you don’t make your goal you will pay someone $100 dollars.

While I haven’t done this yet on this blog I am now considering the idea for future goals as that would add an extra level of motivation to not lose that money.  So would you or have you ever use a Ulysses contract on yourself where you paid someone if you failed?  Or do you think that would add too much pressure to achieve the goal?