Smart Couples Finish Rich Chapter 3: Organizing and Goal Setting

Sundays are State of the Union days in our house, when sweetie and I sit down to talk about how we're doing relationship-wise. Sometimes they're quick check-ins, sometimes we get into a little more depth, depending on what we've got going on. In this year leading up to our wedding, we've decided to make finances a central part of our State of the Union talks. Over the next couple of months, sweetie and I will be reading Smart Couples Finish Rich by David Bach and discussing the latest chapter at SOTU.

Chapter 3 Summary
Chapter 3 breaks down into two different sections. The first section lays out Bach's system for getting your financial files in order. When I read Smart Women Finish Rich a couple of years ago, I set up Bach's filing system as my own, and it's served me well. It sometimes takes me longer than I should to get new papers filed. Instead, I stack them on top of the lid of the file box. But my time management shortcomings aside, the system works well for me. I can always find what I need fairly quickly. Doing my taxes the last two years has been a breeze, with all the receipts for charitable deductions, W-2s, interest earnings statements, and energy tax credit receipts all in one place. When sweetie moved in, I shared my filing system with him, so his financial files are all in this system, too. After reading Chapter 3, it was a good reminder to file the items I've been procrastinating on.

The second section (which should probably be a separate chapter) is about setting goals based on the values we each identified last week with Chapter 2. For each value, this chapter asks us to establish a goal with a twelve-month timeframe that in service of that value. Goals with a longer timeframes (retirement, a vacation home, an around-the-world vacation) get addressed in later chapters, which I find to be an artificial distinction. I would love to see more integration of the goal-setting material in Chapter 3 the chapters on retirement, security, and dreams. Because I tend to think big-picture, I had a hard time settling on goals that could be attained within the next twelve months. It was much easier when I thought about my big-picture goals and broke them down into smaller steps and thought about which of those steps I could take in the next year. Bach doesn't address this, though, he seems to assume that his readers are such financial neophytes that their initial set of goals will be simplistic, short-term, and attainable in a short period of time.

It's not all irritating, though. When I read this chapter last time, I was struck by the steps Bach encourages readers to take in order to make their goals specific and actionable. Those were very helpful components for me in setting my last set of goals, and considerations that I've continued to use as my goals have evolved.

What Are My 1-Year Goals?
Before sweetie and I met up to talk about what goals we should set as a couple, I sat down to figure out what goals I would set as an individual in service of my individual values. Since sweetie's and my values are so similar, I thought that we would have a good jumping off point if we each took a stab at it individually.

1) Stability/security: Save three months living expenses in my HSBC account. I had nearly achieved this goal at the end of 2007 when I had to replace my furnace. I chose to replace the air conditioner at the same time, since it was also nearly 20 years old. The energy savings and tax credit (which expired at the end of last year) make it worth it, but it took a bite out of my savings, and I need to replenish my emergency fund. Eventually, I will probably want to save more, five or six months of living expenses. But I can't save that much this year, with wedding expenses, a home equity loan still in repayment, and a other targeted savings goals to reconcile. Three months is a realistic amount. The direct deposit to my HSBC account will probably need some tweaking later this year when I am able to project my after-tax monthly takehome pay for 2008. But for right now, I don't need to do anything to my direct deposit to make progress toward this goal.

2) Flexibility: I can't pay off the balance of my home equity loan this year, but I can get close. I think I can get it down to 25% of its original balance, maybe even a little lower than that, and then knock it out in 2009, well before the balloon payment comes due. Reducing my monthly debt load will give me more flexibility in my current budget, more flexibility in terms of future job options and the ability to absorb a pay cut, and will have a psychological benefit, too, of helping me feel more free. Those first two benefits won't kick in until the whole thing is paid off, but seeing that monthly balance shrink each month always gives me a psychological boost even if the monthly minimum payments stay the same.

3) Marriage/Primary Partnership: This one is a no brainer. Get married! In just under a year! And don't go over budget in the process!

4) Fun: Sweetie and I are taking a big vacation this year. We kind of did it backwards, buying plane tickets for a beachy getaway before deciding to get married. So basically we are taking the honeymoon before the wedding. We both love to travel, though, so we'll probably find a way to take Honeymoon 2.0 in 2009, but right now we have just the one trip planned. The goal is to stay on budget. Speaking of which, we need to make accommodations reservations today.

5) Giving Back: This is a hard one for me to monetize. I have committed to pretty sizable volunteer responsibilities with two different organizations whose work I admire. Of course I plan to continue my donations to those organizations, and to a few others that I've been giving to for a while, but for this year, my focus will be on my time commitments because those are the new, squeaky wheels. I'm going to serve on at least one sub-committee for each group in addition to the steering committee positions I've accepted, with the goal of improving the youth outreach for each organization. Sorry, folks, don't expect to hear much about this goal this year. This is an anonymous blog, after all, and I don't think I can say much more without getting dangerously specific.

I think this is not what Bach had in mind with Chapter 3, but it's the way of looking at it that makes the most sense to me.

What Are Our 1-Year Goals?
Since our values are so in synch, we had a lot of overlap in our goals section, too.
1) Stability/security: We are each going to focus on savings, me on replenishing the emergency fund and him on--ahem--having an emergency fund, and on starting a Roth IRA. This may be his last year eligible to contribute to one because after we get married in 2009 we will probably be over the income limits. Sweetie, god love him, has saved crap for retirement, so I think he put this on his list largely to ease my worried mind. He may not be able to fully fund it with his debt repayment program (see below) but something is better than nothing.

2) Flexibility: We are both going to focus on debt repayment, me on my home equity loan and him on credit card debt. My goal is to pay off $10k of the home equity loan. His goal is to make $10k beyond his normal salary, either by taking on a second job or by changing jobs and taking a higher paid position. He's actively interviewing on both fronts and has a couple of good leads, though the economic downturn is not doing him any favors, unfortunately. The $10k he's shooting for is in addition to the debt repayment money he can squeeze out of his regular paycheck, and would be huge help in helping him get it all paid off.

3) Marriage/Primary Partnership: Married, check. Also, continue to work on our communication skills. This includes the SOTU. We were remarking tonight that being so deliberate about this time has been nice, giving us a chance to reconnect and check in about lots of things, financial and not.

4) Fun: We are going to spend more time outside this year. This includes our upcoming vacation, working on the pergola and the yard, going on walks and "local vacations" around the city and surrounding areas. And although he is skeptical we will do it more often than not, I would like us to have more TV-free nights than TV-watching nights. I hardly watched any TV before I got together with him, and through the dual miracles of reduced time spent watching crap and the DVR (what? watching a Tuesday night show on a Wednesday?) I think this should be totally reasonable.

5) Career: Astute readers will notice that this is from his value list and not mine. Here's the thing. Sweetie's job sucks. He's very good at it, but it's a difficult working environment in which his division doesn't get a lot of support from management, and he's not paid well. That comes with the territory when you work for a nonprofit, but for a lot of people working in the nonprofit world the low pay is made up for the warm fuzzy feelings they get working for a cause they believe in. Sweetie doesn't get warm fuzzies. His nonprofit doesn't save the world or feed hungry people or de-mine regions of the world recently terrorized by military or para-military mercenaries. It doesn't arm children, either, it's not like he's working for NAMBLA; they're inoffensive and in the aggregate a social good, but hard to get misty-eyed about, and the organizational mission does not speak to his heart. Think: The National Alliance for Show Choirs or Friends Of Anachronistic Colloquialisms. So anyway, it's a bad fit, and he's trying to transition to a position like his current job, but in a for-profit company where presumably the huge efficiency gains and triple-digit productivity increases he's eked out (on a contracting budget!) will be better appreciated.

A new job for him would be a good thing for the both of us. He gets a better job and makes more money, and I get a happier partner and less Playstation/decompression happening in the living room on the weeknights when I would prefer a conversation or some smooching.

So his goal is to get a job in the for-profit world. As first steps, he's going to try to find a mentor and learn a new set of skills, most likely through a relevant certificate program he can do in the evenings. That most likely won't happen until the Fall '08 semester, given the timing considerations involved. I'm not yet sure how I can be maximally supportive except by keeping him in hot meals on the nights he has class, but I'm sure we'll figure that out as we muddle along.

But the thing about talking about a big change like this in the context of joint goal setting is that it gives us space to talk about all the weird underlying issues that can be so unhappy to talk about. Things like I feel like I wouldn't be pulling my weight around here without a job and Being depressed and pissed off about your job but in paychecks is far worse than being on student loans and excited about your career again and I feel like I have so many responsibilities and no choices. And sometimes talking about the unhappy bits leads to much nicer things, like We are in this together and We may have to take turns carrying each other, and that's OK and We will be all right and things will get better. So all things considered, the goal setting has been a success. Next up: goal achievement.