Trade The Journey

Trade The Journey

Reassessing my Goals: The plan to Get there!

Greetings to All who decided to visit Better Financial Times today!

This past week was a bit like the last week, which made it a drag. My investments, of course, fluctuated as did my income but that’s a week excuse.

I can hear the sideline echo, “What happened to your so-called plan from the previous week?”

I’m sure everyone can relate to the excitement of developing a plan to change for the better. Finally, the breaking point has been reached and now its time for action. I was excited as well until I reached the front of the line and the action I had planned to take, I did not.

Looking at the month past, it was a slow month, as the month before and I had to draw down on my savings account. I had experienced a dip income, which resulted in dipping into my savings account- my least pleasant experience.

One thing I have noticed over time in analyzing my expenses is that my monthly expenses trend lower when my income lowers.

 

Wow, what a profound realization.


So the real question is what happens psychology when this cash-flow shortage occurs?

 

Cash-Flow shortage:

Thoughts:

  • This will be a tough couple of weeks ahead.
  • I better think about how I am going to survive on the limited amount left in my account.
  • With the remaining amount, I should be able to make it through the week.
  • If I can manage my money well enough, I should be able to return any excess funds into my savings.

 

Result:

Usually, I avoid any unnecessary purchases. I plan my expenses leading up to payday. I cross the finish line with a few extra dollars remaining in my checking account.

 

Most Common Surprise:

Expected Bills and Automatic Withdrawals. With so little in my account, I attend to make smaller purchases. However, the automatic withdrawals that occur both weekly and monthly, interestingly enough, are what cause me the most overdrafts.

 

It’s a snowball effect. Since the account is already operating close to the minimum, the unexpected but expected automatic withdrawals cause an overdraft. This overdraft triggers a withdrawal from a savings account. For some reason, after the initial overdraft, all of my expenses seemed to occur at once.

Whenever my checking account balance approached the minimum it seemed like the order of deposits and withdrawals would be manipulated to trigger an overdraft. When you’re low on funds, you notice everything. I called my bank and was surprised by the tellers’ response.

She told me that due to the merchants’ payment systems’ varying processing speeds, the bank orders the transactions at their discretion. Of course, there isn’t a single person doing this; it’s computerized.

 

Cash-Flow Surplus:

Thoughts:

  • Payday will be a special blessing this week. With the upcoming payday, I’ll take care of the car maintenance issues before they get worse.
  • I’ll also be able to buy that new television I have been saving to purchase. Maybe I should wait until the time is right or the prices go down further or perhaps not.
  • Since payday is here, I’ll treat myself out for lunch. Since money isn’t a concern, I can get what I want. No need to see the price, I’ll take it and make sure to include the extra shrimp.
  • I’ll pay bills and make the essential purchases once I receive my paycheck. The amount remaining is the amount I have left to spend.

 

Results:

This game plan is usually successful.

 

Most Common Surprise:

Approaching payday after a week of self-denial and self-discipline builds a pressure to spend for me. My lack of discipline as the second-week approaches is always upsetting.  Since I’m so close to payday, I falter and make purchases I shouldn’t. A remedy to this could be totaling the necessary expenses, automatic withdrawals, and the expected discretionary purchases.

If you revisit my last post on trading, I think you’ll get a sense of what trading is. You’ll also see how critical planning is when trading and investing.

 

So what is the plan? The long and short term plan.

 

My long-term plan is to ensure that my money is either earning or returning. I also want to ensure that money will be an absent worry in the distant future.

My short-term plan is to save as much money as possible. A detailed short-term plan, I don’t have. Planning the purchase down to every penny probably won’t work for me. I track all of the expenses I make on a daily business but don’t have a plan.

A new strategy could be thinking of the potential purchases that could arise the next day. Certain places and items are triggers for me to purchase. Avoiding these items and places is an easy enough solution.

Listening to an Audiobook on “Millionaire Traders” by Kathy Lien provided me with a strategy to deal with this dilemma. One of the traders mentioned that for him to be successful he has to remain as objective about trading. For him to do this, he plans his entry and places a stop upon entering the market. His reasoning is that when your investing you become personally invested and this clouds your decision making.

Since he has determined his entry and stop while he is still objective, he figures that he has reduced his chance of trading emotionally.

 

Let’s attempt to take this concept and apply it to the spending plan.

 

I’m going to begin by thinking about the potential purchases the night before and visualizing the impulse purchases likely to sway me during the day.

 

Suggestions? Thoughts? Tips?

 


 

 This past week deserves a “D.”

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