• Plan, Plan, Plan and Hope for the Best

    by  • October 8, 2011 • Money Management and Planning, Seven on Saturdays • 2 Comments

    I’ve learned that the best way to avoid getting into really bad situations is to know how to get out before you get in. Don’t get yourself into a situation you don’t already know how to get yourself out of. Things that you think shouldn’t happen, will happen. So have a plan for how to deal with them when they do.

    #7. This week GetRichSlowly shared a post encouraging readers to have a Plan B. The economy isn’t very strong at the moment. You’ve got a Plan A which depends on your current income level. What would you do if that went away? If you’re worried that your income may be interrupted for any reason, whether that fear is rational or not, set yourself to work making a plan to handle that situation. The one sure thing about the unexpected is that it comes when you’re not expecting it. So start expecting and you just might ward it off.

    #6. One of my all-time favorite financial bloggers, Len Penzo shared 100 words on why it doesn’t always pay to do things yourself. I love to DIY whenever I can. In fact, I learned this week how to fix a garbage disposal. It took about 5 seconds to fix and only required an allen wrench. That totally made my day! But there are many, many things where doing it myself just causes more trouble down the road. It’s healthy and fun to be frugal. And it’s good to know your limits. Work to find a balance.

    #5. This week the world lost it’s best CEO, Steve Jobs. He embodied the entrepreneurial spirit and exemplified a life driven by purpose, vision, charisma and guts. I wholeheartedly admire and respect the entrepreneurial drive. And I also agree with MoneyCrush that anyone starting a new venture should have an exit plan before they begin. Starting a business is a huge adventure. It’s a risk with potentially rich rewards.  With all the inherent risk in leaving a “safe” job in order to pursue a lifestyle (which is how I think of running a business), the best thing you can do to increase your chances of success in the long run is to minimize all the risks you can think of, one obvious one being how to get out of the business when that eventually becomes the right thing for you to do (whether you choose it or not). And remember, exiting can be a good or bad thing. One thing is for sure though, once you commit yourself to it, everything between now and the exit will be an adventure.

    #4. If your family is supported by two incomes, have you asked yourself “How would we manage on just one income?” Do you rely on the second income just to survive? Or is it just icing on the cake? Take the time while you’ve still got two incomes to make a plan for living on just one. As the plan comes together you’ll know what you need to save in order to just get by. And you’ll also have an opportunity to make choices about your lifestyle, giving you some control over the balance between freedom and privilege now and in the future.

    #3. Wouldn’t it be nice if money was in unlimited supply? If only … Realistically though, while you can’t have everything, you can set yourself up to have the things you care about most. Jennifer Derrick’s post about about priority spending really resonates with my own philosophy. You have to pick the things that matter most to you and build a spending plan around them. You’ll have more of the stuff that you care about and less worry. If you’re interested in this, Plenty has helped me tremendously to prioritize my spending. I recommend it to everyone.

    #2. One of the biggest wastes of money imaginable is overdraft charges. With Bank of America’s recent changes to their policy I thought I’d touch on this one briefly. Avoid overdraft charges, period.

    #1. DigeratiLife hit a home run this week with a post on keeping a financial diary. My financial diary is my super-secret, nuclear powered, turbo-charged weapon against debt. I can’t recommend it strongly enough. It’s given me incredible visibility into and control over my spending.

    Photo credit.

    About

    I had an unhealthy relationship with money until my early 30's. I write about how I developed a healthy relationship with money. I share ideas about personal finance that have helped me to break the cycle of living paycheck to paycheck and achieve greater financial freedom.

    2 Responses to Plan, Plan, Plan and Hope for the Best

    1. October 12, 2011 at 1:05 pm

      These are all great tips! Regarding point #6 — DIY works if you know what you are doing. But you can do my harm than good if you don’t! I prefer to leave the work to the experienced folks out there who can do a better job than I can in some areas. :) Knowing what to delegate extends to home management as well. :)

      • Mr Frugal
        October 12, 2011 at 2:19 pm

        Absolutely! Thanks DL.

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