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While cleaning up my computer hard drive I came across one of my "planning" spreadsheets. I do these from time to time, generally to figure out the long-term impacts of our financial decisions.

At the time, we were assessing the financial impacts of having our first child, and how that would affect our long-term financial goals (buying a house, retirement, etc). We also wanted to see the impacts of becoming a one income household. In running the numbers, we could see that with discipline we could reach our goals; we could make that decision with a degree of certainty. Just over a year later, our first child was born, we were a one-income household, and the rest, as they say, is history.

It's interesting to see the progress we've made in just under four years by sticking to our plan. I enjoyed seeing not only where we were, and what our budget was, in August 1997, but also where we thought we'd be in June 2001, a date so far away.

In August 1997, we had $8,000 in credit card debt. It's now long gone; we can't remember the last time we paid interest on a credit card. In August 1997, however, our plan showed we'd be just about done with it at this point in time.

In August 1997, we had two car payments totalling about $650/month. Both of those are now paid off. At the time, we thought we'd still be paying of the remaining balance on the second car in August 2001. Instead, we have a minivan that we're rapidly paying down.

In August 1997, we had a retirement plan with about $8,000 in it. Today, it's closer to $50,000, in spite of the turbulence of the past year. The growth in the balance has come less from returns than from steady, consistent contributions over the past 40+ months. (Most of our money is in NASDAQ stocks; we lost a lot of value in 2000 like many others did).

Our discretionary spending budget (food, clothing, entertainment, medicines, etc) has gone up $300 per month since August 1997. We were pretty impressed with that one, since we now have two children and had moved from a 2 BR apartment into a 3 BR house. (In case you're wondering... our income has gone up much more than $300/month.)

Oh, the house? In August 1997, we projected buying a $175,000 house by early 1998. In looking at the numbers, we decided that it was too expensive, and didn't give us the cash flow to pay of those nagging credit cards and car loans. Instead, we bought a $100,000 house and saved hundreds per month, not only in lower mortgage payments, but lower maintenance and utility bills as well. Unbeknownst to our August 1997 selves, that money got rid of those credit card and car loans we thought we'd still have. That activity, in turn, enabled us to save up enough so that we could build our dream home five years sooner than expected. We should move in... around August, 2001.

The moral of this story? First, if you still have that nagging credit card debt, don't despair. At some point in the future you will be looking back on your August 1997 and seeing that patience and discipline were the answer to meeting it. Second, take the time to plan, and see the implications of the decisions you make today on your future financial situation. Finally, expect the unexpected and be as prepared as you can, so that when opportunities to reach your goals come along, you are prepared to act.
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