Putting a Financial Plan into Action

I’ve been reading David Bach’s book “Start Late, Finish Rich”.  Perhaps you’re also finding it challenging to increase your savings in a time when gasoline, food, and municipal utilities and services are all undergoing double-digit increases.  However, following the adage of “every little bit helps”, here’s what I’ve put into place to date: 

• Identification and elimination of my Latte Factor.  For me, that was the $2 bagel with sun-dried tomato spread that I bought from the building lobby café on the way up to my workspace each morning.  Actually, eliminating this daily expense became easy the day I started my new job in a different building!

• Identification and reduction of my Double Latte Factor.  This was more difficult as I don’t subscribe to premium cable channels, high speed internet services, have a fancy cell phone, have regular manicures, pedicures, or haircuts, hire housekeepers or gardeners, or purchase a yearly wardrobe.  But I could admit that I frequently buy needlework projects and patterns and so have resisted purchasing those on a regular basis over the past two months.  The added bonus?  I’m working through my current stash of projects instead of adding more and more to the pile.

• Wrote out a specific savings plan.  I wrote out very specific goals and strategies for achieving those goals.  One example is to “create $XXXX slush in an interest-bearing checking account”—I use the slush as wiggle room with check writing, and it represents emergency monies if needed for unanticipated expenses.  My approach is to build that slush by tracking but not recording rebates and expense report reimbursements into my checking account register.  (I do balance my checkbook account to the penny each month so I am able to keep track of these transactions.).  My other goals have to do with not incurring new debt in 2005; increasing my savings account year end balance by 10% over last year’s ending balance; and  increasing the percent contributions I’m making into my retirement plans.

• Took the first “baby steps” to fulfill my savings plan.  Today, I went to the bank and doubled the amount I have transferred to my savings account with each paycheck.  Last week I upped my retirement plan contribution by a couple of percentage points.  As Mr. Bach points out, these saving strategies are relatively painless as the money is deposited before it gets into your pocketbook.

And then life happened.  Within a 2 week period, the ignition in my oven needed to be replaced; the home computer died and needed to be replaced; and the washing machine transmission died, requiring the replacement of the entire machine.  However, I won’t let all that de-rail my savings plan; rather, I accept that I’ll be moving towards my goals more slowly than I had originally thought.  I’m watching for other Latte Factors I could eliminate from my life and asking myself if a given purchase is really needed.  As long as forward progress is being made, I’m heading in the right direction.  Onward!

--Dot Snow; 14 July 2005