Pete the Planner: When life derails your financial goals, get back on track quickly

CLOSE

Americans credit card debt has just hit a disturbing record of $1.02 trillion according to the federal reserve. Buzz60

It’s still frigid in most of the United States, which of course means one thing — treadmills are getting their annual winter beating.

Millions of Americans are running in place in basements, health clubs, and even the ironically small rooms in hotels which are dubiously called “The Fitness Center.” Minute after minute, mile after mile, runners are going nowhere. And no one has a problem with that, because there really is no other option which doesn’t involve frostbite or more layers than a Super Bowl appetizer dip. The treadmill is the only real choice for people who want to run forward. Yet, the fact of the matter is, sometimes it’s OK to run in place, no matter how defeated or frustrated you might feel.

As much as you’d like to relentlessly progress forward toward your financial goals and aspirations of stability and success, there are periods of your financial life in which you will go absolutely nowhere. Yet, it’s OK. Your life, more accurately the events both within and out of your direct purview, may present you with a challenge which supplants your goals with your immediate priorities. 

►Pete the Planner: Take pride in your major financial victories

►Generation Debt: Which generation has the most debt and worst credit scores? 

►Know your priorities: Never put college savings ahead of retirement

Do you hear that sound? It’s the sound of your furnace not blowing. Yes, you’re actually hearing silence. The problem is that your furnace should be blowing and it will cost $6,000 to get a new furnace. You don’t have $6,000, and you’ve just started funding your primary financial goal, paying off your student loans more aggressively. The interest rate on your furnace is about 7 percent, while your student loan rate is closer to 4 percent. To compound the issue, the furnace loan is amortized over five years, which means the payments are relatively hefty compared to your recently increased student loan payment. Not only does this frustrate you, but it kills the momentum you’ve recently gathered. 

As difficult as it might be to do, you need to be OK with your goal derailment. You have to see it for what it is. But more importantly, you mustn’t see it for it isn’t — a failure. Sometimes the urgent expenses which pop up can last months — and sometimes they can take years. 

Do you know who almost always runs on the financial treadmill? Parents of preschool children. As if there aren’t enough challenges with the cost of childbirth, raising a child, and preparing for the financial difficulties of an ever-increasing college education, enter child care. From what I’ve observed and experienced, many parents are spending well in excess of $10,000 per year, for the five years leading up to kindergarten. Talk about running in place.

Getting frustrated is frustrating and feeling defeated is defeating, but there’s a much bigger problem when your immediate priorities require you to waylay your goals. You can get lulled into complacency while you’re dealing with the now, which means you won’t necessarily jump back into funding your primary goal once your more immediate need subsides. It happens all the time, especially when parents are finally able to eliminate day-care expenses. Somehow, someway the money which was once allocated toward a goal, which then was reallocated toward an urgent priority, all of the sudden gets reabsorbed into lifestyle expenses when the temporary expense ends. 

There are two particular pieces of wisdom to discover within the problem. First, don’t get so frustrated by the urgent expense need that you beat yourself up over something you can’t necessarily control. Young families do this frequently with child-care expenses, as does anyone who is dealing with significant medical bills.

Could you have done something to prevent the seemingly involuntary expense? Arguably. But it certainly isn’t worth arguing about now. That ship has sailed. Get through the expense with your eye on the last payment. Which brings us to the second point of action, take immediate action the very second your immediate expense is finished. 

You need to recapture your money every step of the way. New parents should recapture money, when the days of formula and diapers are left behind. Take that $150/month and re-engage it with the goals it was once married to. And when day-care costs end, slap that $1,000+/month expense back to your goals — immediately.

Don’t take a breather. Don’t think about it. You’ve just made your way off the treadmill. So ... run.

Have a question for Pete the Planner? Email him at AskPete@petetheplanner.com or visit petetheplanner.com.

Where to watch

Tune in to Pete the Planner, who also is Fox59’s personal finance expert, at 8:15 a.m. Wednesdays.