Updated on 11.04.09

Revising and Reworking a Failed Financial Plan

Trent Hamm

In 2003, shortly after getting married, I had an ambitious goal of saving for a 20% down payment on a house by the end of 2007. Over the next year, I did make some savings progress, but I kept falling behind my milestones. Eventually, fed up with myself, I gave up and more or less just spent the money freely. I thought of myself as a complete failure.

When I made that choice, I was exposing my own idiocy in several different ways.

First, I was demonstrating a complete lack of commitment to a goal. Rather than making small sacrifices to fulfill a big long-term dream, I let the dream fall by the wayside in the name of instant gratification.

Second, I didn’t step back, revise, and rework the plan. When I realized I wasn’t making the goals I had set, I didn’t sit down and re-evaluate things. Instead, I acted like an idiot again and just spent the money with reckless abandon.

Third, I allowed that failure to define myself more broadly as a failure at money management. I just believed I didn’t have what it took to be successful at saving. I let myself believe I was a broader failure just because I couldn’t handle that goal.

Setting a big, audacious goal for yourself is inspiring. It makes you feel good about yourself and pushes you to accomplish things beyond what you believed to be possible for yourself.

I’m going to be debt free in three years.

I’m going to have six months’ of emergency fund in the bank by the end of this year.

I’m going to have seed money for my business idea an a year.

We conceive of these great goals, we plan for them, we sacrifice for them.

And then they fail.

Something changes along the way. An unexpected event occurs. We make a few bad spending choices. We overlooked some key element that completely alters the picture.

And we’re left with that empty feeling of failure. We didn’t make that goal. Instead, we just messed it up, like countless other things in our lives (yes, everyone messes up – a lot).

I could sit here and list my own goal failures all day long – as if the one starting this article wasn’t bad enough – but one thing this failure has taught me is that failing at a goal doesn’t mean you’re a failure or even that the goal or the plan was a failure. It just means you need to go back to the planning stage for a bit. Here’s how.

First, never define yourself as a failure because you failed to accomplish a goal. The inability to accomplish a goal is, yes, in part due to your mistakes, but there are usually countless other factors involved as well. A breakdown in a plan merely means that you need to step back, look at what went wrong, and re-work the plan.

Second, look for the root cause of what went wrong. There’s usually an obvious answer, but that’s not the one you want. I suggest using the “five whys” game when figuring this out. State why it seems that the plan failed, then ask yourself why. When you answer that, ask yourself why again. Repeat it until you get down to a root cause that can’t be broken down again. Often, it takes five or so “whys” to get there.

Third, address that root cause. It might be something you can take care of immediately. It might be something that you’ll have to slowly modify over time. Whatever it is, figure out a plan for addressing that specific root cause and focus on changing that.

For me, the real root cause of many of my financial troubles was a lack of persnal control. I would constantly sacrifice the long term for the short term, because I loved the rush of instant gratification. So, the first step for me towards completing a lot of my bigger goals was to simply break that addiction to instant gratification. I mostly did this by utilizing the other changes in my life (having a baby, mostly) and finding ways to get that gratification rush without spending money (like snagging a hot book on reserve at the library, for example).

You may find that your bigger goal has to be delayed a bit while you deal with the more immediate problem. Maybe you need to work on your own behavior, or maybe you found you need a bigger emergency fund. Get the smaller goal finished first – the bigger goal can wait.

Fourth, ask yourself if the big goal was something you really wanted in the first place. You may find that, after fixing the root problem, your perspective has changed. The long term goal you had in the past doesn’t reflect the new understanding of yourself that you now have. If that’s the case, great. It’s a powerful sign that you’re growing as a person. Don’t be afraid to abandon a goal that no longer matches what you want or the person that you are.

Finally, try again. Start over on your modified goal or give some thought to a new goal. A failure doesn’t mean that you should give up on your big dreams. Instead, it’s just more insurance that you’ll make great progress towards your goals.

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  1. frank b says:

    regarding banks—one of the things i’ve noticed on a frequent flier forum is that some banks are now offering miles for their debit (not credit) cards—would like to know more specifics as you work with online banks—beneficial since many folks trying to rebuild their life may have difficulties getting credit cards but should not have a problem in most cases with a debit card tied to their bank

    and frequent flier miles add up and can be of benefit to us poor folks—i keep aquiring alaska miles everytime i shop at safeway through their club card program—-after five years i actually got a one way flight for my daughter visiting from the south—had to pay $$ for the flight home but saved me $160 simply because i shop for some (not all) of my food items at safeway

  2. Vicky says:

    Oh, what a great post.

    I have things that crop up all the time that must be dealt with. I have credit card debt (not a ton, but enough that it will take time to pay down) – but I have pets, too.

    Their health comes way before my debts, so if something comes up, I will take care of it. Often this pushes back my dates for when I want my goals paid off.

    Like you suggest – instead of blaming myself and giving up, I step back, re-evaluate, and re-adjust.

  3. Anne KD says:

    This happens with losing weight, too. Like having health issues crop up out of nowhere, in addition to getting bored with a specific way of managing a diet.

    Financially, I had to turn saving money into a game for myself. I have a certain amount of money to work with every month, and anything I can save from one area (groceries, for instance) I can put into my ‘play money’ pile. I have plans for that play money. Calling it ‘play money’ helps me to not take myself so seriously and it helps build my personal savings. Money saved from our joint finances is going towards paying down some debt that we picked up over the summer in the midst of doing a refi.

  4. Tahlia42 says:

    This would have been a perfect end of January post to help everyone who’d already broken their New Year’s resolutions!

  5. Cambo says:

    Root cause and asking why 5 times… sounds very Kaizen!

  6. Tahlia (4)–How true!(the January effect)

    Trent, your analysis of the mechanics of why the plan didn’t work and how to get back up and running are perfect.

    Short term comfort is a compelling draw for most of us, and it usually takes just a little push to move us back into old, bad habits. It’s amazing how much effort has to be expended just to overcome something so simple, but that hurdle has to be factored into the equation any time we make plans to move out of our comfort zones.

    Getting comfortable with the concept of change itself seems to be a task worthy of our full efforts. Until we’re settleed in the change, we’re just reciting good intentions to ourselves.

  7. Tyler says:

    “Ask yourself if the big goal was something you really wanted in the first place.”

    This is a great question for someone who is saving too MUCH money to ask themselves. You can be just as miserable trying to save too much as you can saving not enough.

  8. GayleRN says:

    I have collected a few aphorisms about this subject. I don’t remember where they came from but they are posted where I will see them.

    Be not ashamed of mistakes and thus make them crimes.

    Failure is the opportunity to begin again more intelligently.

    Genius is nothing but continued attention.

  9. Claudia says:

    Having a goal of being debt free in say 3 years sounds great, but the first thing you need to do is divide your debt with estimated interest by 36 months and see if it is even doable. If paying that debt down means not enough money left to pay your necessities it is obviously not going to work. So, you fail and give up. One also needs to budget in a few fun dollars each month or one tends to get the mind-frame, “Oh well, I’ll be in debt forever, so why bother, let’s spend.”
    When my goal was to be debt-free, I did not put a time frame on it, I committed a dollar amount (above my actual payments)each month to paying off debt, I estimated how long it would take, but that was not firm. I also realized that some months, other needs may arise so that I could not utilize the money toward debt reduction.
    We were debt free until we moved 3 years ago, but our house will be paid off, and we will be debt free,in 5 years or less depending on how many months I can increase the extra principal payment I have allotted.

  10. Claudia (9), that was brilliant! I’ve worked in credit much of my career and what you say about “I’ll be in debt forever, so why bother let’s spend” is right on the money.

    People can’t see immediate improvement from small efforts so they abandon the plan entirely and find ways to cope with the debt rather than to eliminate it. But unless you come into a windfall, slow and steady will be the only way.

  11. K says:

    I think there’s another factor that is sometimes at work here, which is the idea of celebrating your small successes. So often we will continue to flog ourselves with guilt over the things we didn’t do, and don’t take the time to recognize the little victories that we’ve worked hard to achieve.

    Celebrating the steps you take on the way to a goal creates momentum towards continued efforts.

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