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Are You Just Cruising, Or Are You Going Somewhere?

When I was a high school student growing up in a small Kansas town with a population of about one thousand people, two or three evenings a week my two buddies and I would pile into one of our cars and drive. We would drive around town, or travel some of the country roads, or drive to a neighboring town that seemed to have a lot of pretty girls living in it. Sometimes we would go to a larger city thirty miles from home where we might-or might not-see a movie or shoot some pool. Usually we had no idea what we were going to do or where we were going to go at the beginning of the evening. We just liked hanging out together and driving around. We were just cruisin'.

A few weeks ago I went to Monterey for the weekend. I drove out of the Sierra mountains to California's "Great Central Valley", took highway 145 to Madera, hung a right onto 99, turned left onto 152, followed it to 101, turned right on 156, and found the blue Pacific ocean and the beautiful Monterey Peninsula.

When my friends and I were "just cruisin'" it really didn't matter where we turned when presented with options, because we had no notion of where we were going to begin with. We could turn left, or right, or go straight; didn't matter. When I drove to Monterey, the turns mattered a lot. I knew where I was bound, and therefore I knew just which turns to make and which ones to avoid making.

These two very different kinds of trips can serve as a metaphors for ways people can choose to conduct their lives. Living life in the cruise mode can lead to some spontaneous, interesting, and very fun events, (pretty girls in the neighboring town), but can also lead to a lot pathways we may not want to follow and dead end streets we may wish we hadn't visited. Living life having goals we want to accomplish gives some guidance to our choices, and, who knows, we may meet pretty girls (or guys, for the ladies) too. By having goals in our life, the steps required to reach them begin to take shape and become clear, and the odds are we will reach most, or at least, many of them.

Actually, there's probably a balance in there somewhere that's best. Something that allows for both spontaneity in some areas of life and planned discipline in others.

Taking a cruise or taking a trip with a destination can also serve as metaphors for the financial "trips" we are all engaged in making right now. If we handle our finances in cruise mode, who knows where we'll be in five years, or twenty years, or at retirement age. If we deal with the money we earn in trip-with-destination mode, we WILL know where we will be in five years, twenty years, and at retirement age because the latter will probably be our destination and the former will be signposts along the way.

By now it won't be a mystery to you that I'm talking about developing a plan complete with finance related goals and a fairly clear sequence of steps to be taken to accomplish those goals. While the plan you make and the goals you work toward will be unique to you, some preliminary steps are common to every such effort, and a number of them are listed below.

1. Doing a "Net Worth" calculation tells you where you are now, (a good thing to know when you're starting a trip), and entails totaling up what you have and what you owe, and then comparing the two figures. If you find out you owe quite a bit more than you have, you've got some serious work to do.
2. Tracking all your expenditures over a period of months-a year is better-and totaling them by categories tells you where your money is going currently.
3. This step is a brutal one. Now you take a completely merciless look at your expenditure categories and amounts in order to find places where you can free up money to shift toward the goals you have in mind and will factor into your completed plan. Almost certainly you will be prompted to review your purchasing decisions, your credit card habits, and other things that will help you decide how to free up some bucks for saving and eventually investing for your future goals.

My guess is that if you have never done the work just outlined before, you will find it very difficult at the start. However, as you get further into the project, you'll find it easier and more gratifying; and, enlightening as well. You will have found the seeds with which to grow your money for the future in a planful way.

So, what will it be, a cruise or a trip with a destination? The really great thing is this, it's your life and your money. You work hard for your money and you can decide how best to use it toward your own goals to make your life what you want it to be.

arley