Financial Planning: It Starts with a Simple Goal
April 15, 2011When I read the article, Sumo Wrestler becomes Heaviest Man to Ever Finish Marathon, about a Sumo wrestler who ran and finished the Los Angeles marathon and in doing so became the world’s heaviest man to ever finish a marathon (~400 lbs.), I felt inspired. If you look at most marathon runners, the LAST THING you think of is sumo wrestling. When you look at sumo wrestlers, the last thing you think of is long distance aerobic exercise. That’s what makes this story so interesting to me. This guy (Kelly Gneiting), not only did something that most people would think he had no shot at doing, he has set the bar even higher. He wants to swim the English Channel. He knows how to set goals and not only achieve them but set them higher again after reaching the 1st goal. Many people could learn a thing or two from him.
How many times have I met with someone who has fallen into the trap of overspending and under saving? Too many times to count! What if somehow I could find what it is that makes each person tick? Find a way to tap into the part of the brain that creates that elusive thing called “motivation?” If I can tap into their inner Kelly Gneiting, help them set the bar higher, help them change their financial habits, then so much progress can be made that their stress levels (which are sometimes overwhelming) can be managed. And it all can start with something as seemingly simple as goal setting. I’ll tell a story about one person I met a while ago.
When I met her, she was in severe debt crisis and was on the verge of being evicted from her apartment. One area of her budget gave us a bit of hope, but it was an unconventional kind of hope. The payment on her new car (18 months old) was nearly $550/month. It was a nice car, but the payment was killing her budget. She was living paycheck to paycheck and could realistically afford about $250/month; the extra $300 was causing her to fall behind on other bills, including her rent. So, after reviewing her budget and realizing the impact that the car was having on the rest of her budget she decided to do something unconventional. She talked to the dealer who sold her the car and negotiated a deal that allowed her to return the car, buy a very used one that they had just taken in trade, and walk away with a $200/month payment. With the savings on the car payment, she set the goal of paying off 1 of her 6 credit cards with balances. It took her 4 or 5 months to pay off a store credit card that had a 24% rate of interest. She rolled that payment along with the car payment savings into her next card, and repeated the process. I talked to her recently and she is 1 card away from being debt free. Her rent is paid every month on time. And, she has resumed contributions to her 401(k) plan. When the last credit card is paid off, she is going to start saving. Her 1st goal is to have 6 months of expenses saved. Her 2nd goal is to build a $100,000 balance in her 401(k) plan. I feel certain that she will reach those goals. And from there, she will most likely set an even higher set of goals. She is driven now; obsessed with getting herself out of debt and into a financially secure position.
In a fluke of timing, I talked to her the same day I read the article about the Sumo wrestler running the marathon. They both took on huge challenges. Both succeeded. Both seem likely to take their existing success and build upon it with even more success. With each of them, it all started with one simple goal.