Financial Planning and the Stonehedge Mystery

December 23, 2011

For those who love mysteries, one of the longest running mysteries I can remember is Stonehenge. I mean, what is the meaning of those stones in that location? Who put them there? Why? How? Well, one part of that mystery has been solved. We now know the origin of the stones. Archaeologists spend years trying to solve mysteries, and now that this one is solved, all it does is raise more questions. At times, I’ve found that is also the case when working with people regarding their financial lives.  Here’s the condensed version of the story of someone I’ve known for a few years.

When I first met her, the biggest financial mystery in her life was where her money was going. She had no idea where it went, and she felt like the day after payday she was broke again until the next payday. It was a cycle that kept repeating and she had no idea how to stop it. We looked at her 3 most recent bank statements and categorized all of her spending using an Expense Tracker, and for the first time in her life she understood where she was spending her money. From there she set targets for reducing her spending in a few areas. In order to keep her focused on this, she signed up for Mint.com and used their text message alerts to maintain her discipline. Mission accomplished, right? Nope! Not so fast. Once the “where is my money going?” mystery was solved, the next mystery was right in front of her.

How do I get out of the debt that I got myself into when I didn’t know where my money was going? That was the next mystery that she had to solve. Once again, we worked on a system to help her get out of debt. We used a Debt Blaster calculator to list her debt balances, interest rates, minimum payments and from her budget we found $50/month that could be applied to her debt payments in the form of additional principal payments. It turned out that she was going to be able to pay off all of her debts in just under 2 years. And, if she could cut more spending out of her budget (she was thinking about giving up her land line because she never uses anything other than her cell phone) and turn that $50 to $100/month she would be totally debt free in about a year. The “how to get out of debt mystery” was now solved. But, guess what? Something else was right around the corner. Actually a few somethings!

Since those meetings about budgeting and debt, we have worked on what she considered a few other financial mysteries. We have talked about why it makes sense to build an emergency fund, how she can start saving for college for her kids, how to save and invest for retirement and most recently “what is estate planning all about?” Every time she feels like she has one mystery solved, another one pops up. She’s just like a financial archaeologist! What lesson can we all learn from her journey? Managing your money isn’t a “one and done” event; it’s a lifelong journey filled with all the twists and turns and surprises of the Stonehenge mystery. As long as you’re willing to keep digging, you can make progress toward a lifetime of financial security.