30 second video: protect your emergency cash like a chess match queen
May 22, 2008

New shoes, new iMac, & old cash worries:
It’s fun spending cash reserved for emergencies.

Even more than fun – it’s bloody easy!

It’s easy to break discipline & access those dollars meant to protect from rainy days. But since that approach has made my family more vulnerable financially, it’s time to rethink. The short-term benefits of a change are clear.

Emergency cash reserves & chess: create the pawns

After 7.5 years of marriage, these prove true:

  • if we have only one stash of cash, we’ll spend it. It matters not if it’s reserved for emergencies. We’ll spend it on non-urgent desires. Do these desires help us be more effective sometimes? You bet. But occasionally our compulsion runs rampant.
  • it’s time to view emergency reserves like a chess queen and find ways to protect her.
  • thus it’s time to create the ‘chess pawns’ in our personal finance life.

The Pawns are the soul of the game. -Francois Philidor

For the past few months, I’ve tested a new strategy. And it’s producing positive results for Sean and me. The goals are two-fold: truly learn to reserve emergency funds for unforeseen, urgent cases; and next, create a system to enable that habit.

Here’s what we did:

  • set-up (10) online sub-savings accounts via ING Direct, in addition to our main emergency cash reserves account. These are metaphorically ‘chess pawns’ protecting the emergency cash ‘queen’. In the past, we dipped into cash reserves for these reasons; so we decided to designate sub-accounts to ideally prevent future dipping.
  • each month, monies direct to these sub-accounts i.e. medical/dental; clothes/dry cleaning; annual visit to parents; pet care; computer/tech; family gifts; books/education; condo; Alaskan trip for parents by 2012; relocation expenses.
  • each pay cycle, 12% auto-deposits into emergency cash savings with app. 3% funneling to the sub-account buckets. And so far for one business quarter, the emergency bucket has stabilized and steadily increased since we use those other sub-accounts for spending choices. Hooray!
  • Note: at least so far, we don’t necessarily spend monies each month that were allocated to those sub-accounts. Yet if for example my husband needs Ruby on Rails books for his coding library, he has accessible, dedicated funds for that decision.

Pawns, marriage partners, & the psycho-summary:
It’s just another way to budget. But the tangible existence of these ‘pawn’ sub-accounts has helped us stay on track with building emergency cash. And it’s helped to clarify spending priorities.

It’s working too from a psychological perspective aka it’s less stressful in the guilt department. In the past, I’d mentally beat up on my husband and me for dipping into emergency reserves for play or even basic needs like new shoes (…to replace that broken heel). Footnote: guilt drains marital trust and fun for sure!

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$1million by 2012: dream it, plan it, live it
October 13, 2007

So it’s time to take ownership & aim big.

I remember once being fearless in the face of challenges and dreams — going after them was the fun rush of life. Then on the financial front – I learned how much it costs to retire, to retire with decent health care protection, to raise children and their education, to run one’s own business, and more …. my momentum to achieve sobered-up.

Why is that? Maybe it’s just looking at too much at once -vs- one step at a time. Maybe it’s taking one’s self too seriously. Maybe dreams were too high with resources & energy too low. Is it even possible to have dreams too high?

…a mix of all likely but here’s the sitch: family members need our help. They’d never, ever ask for financial support. But bottom line, their situations are precarious & their means too small to evoke stability on their own. My judgment could be off but after reviewing all up, down, and sideways my husband and I agree taking action helps more than fretting.

And results just don’t fall from the sky. So can we realistically help? yes. Can we preserve our basic needs & personal savings plan too? yes. So is it time for a plan?

Yes and here it is:

$1million by 2012 (that’s $1million in overall paper value vs net).

It makes my stomach tight writing this out, tight as in nervous. But Jonny Goldstein just published his big dream. And his resolve and zeal are contagious.

So here it is:

Summary of Intent:

We are millionaires by 2012. By that year, we will have built our financial wealth to at least $1million through dedicated & united partnership to include: multiple income streams, property ownership in secondary cities, tax control, & wealth protection. Our love of life motivates this intent – and our family, whom we most dearly want to help.

It’s posted at our desks.

…along with the plan, the numbers, the benchmarks, a list of mentors (…need to contact them), & somewhere deep down is something that feels like resolve.

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parents’ retirement planning & reality checks
August 10, 2007

Over 50% of American retirees will be wholly dependent on their relatives & welfare subsidies per Richard Paul Evans.

Regarding one’s parents, what are effective ways to plan for this? Surely it’s a matter of good communications with one’s folks, education on potential needs like senior healthcare, and taking incremental steps to prepare (and living within one’s means).

I’d rather have these potentially awkward talks with my parents now – and really enjoy our time on Earth (vs having high-octane financial stress at times when you’d rather be an emotional companion with them).