As I mentioned yesterday, we just found out that my wife is pregnant. That means that all the plans I had for this year are toast as we now have bigger priorities.
But it’s ok. I built my plans to be flexible. I didn’t write my budgets or savings plans in stone, we’re free to move our targets as needed. Since we’re currently making enough to cover our bills and our loan payments, it becomes merely a matter of shifting budgets around and making sure our emergency fund is fully funded.
For example, we had socked away $3,000 in a CD to pay off the rest of our car loan so we could move on to paying down one of our other loans. Now, that money will be used as part of a down payment on a new-to-us vehicle (probably a minivan) sometime next year. So, the money will keep earning interest until we decide on a new vehicle and we’ll just continue paying off the Vibe on its normal schedule. Instead of paying it off this year, it will likely be paid off sometime in the middle of next year. Unfortunately, that doesn’t free up the extra $300/month I wanted to put toward our home equity loan, but I can almost guarantee that our next car payment will be less than $300. That will allow us to overpay on that loan and we’ll just start paying extra on our other loans later.
But while flexibility is good, sometimes you do need to really lock in the really important goals. While I’m comfortable with allowing most of our financial plans to change, two are “untouchable”: I will not decrease my current 401(k) withholding (currently at 6%) and I will not decrease the amount I am giving to church. No matter what happens, short of a full-blown emergency, these will not decrease. Everything else, though, remains on the table.
The key is to remembering that budgets and plans are tools – a means to achieve an end. If you do not adjust your tools to your changing tasks, eventually you’ll find yourself trying to hammer a nail with a backhoe. Build your plans to fit your current situation as closely as possible, but remember to keep room in there for the inevitable changes that will happen in the course of normal life. That is the key to a successful financial plan.
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Flexability is extremely important to us as well. We’re in a situation where our only debt is a mortgage and student loans (locked in at a rate below inflation), so we’re putting everything we can into our mortgage. Once are mortgage is gone, there will be no more boundaries to pursuing our dreams (doing work we enjoy & spending even more time with our kids).
Are you getting an employer match on the first 6% of your 401k contributions?
This is a great reminder – in fact, I Stumbled it :)
I get easily frustrated when my savings isn’t going as fast as I want it to because of things that come up. I needed this reminder to be flexible :)