Setting a BHAG

[Editor’s Note: This is an independent post written by JJ. This post may contain affiliate links. Please read our disclosure for more info.]

BHAG stands for Big Hairy Audacious Goal.  According to Wikipedia, a Big Hairy Audacious Goal can be described as a strategic business statement similar to a vision statement which is created to focus an organization on a single medium- to long-term organization-wide goal which is audacious, likely to be externally questionable, but not internally regarded as impossible.

While the Wikipedia definition is targeted towards an organization, I like to think a BHAG can be used when setting personal goals as well.  My wife and I sat down this past Saturday to review and finalize our 2019 goals and to set our 10-year BHAG. We actually have two 10-year Big Hairy Audacious Goals.  Both of which are extremely questionable, but not impossible. We will need to work hard and work together if we want to reach either of our BHAGs.

For transparency purposes, my wife and I are very goal-oriented people.  We enjoy setting goals and tracking progress, but we also understand that life can change in an instant.  We all are in different seasons of life.  These goals are based on our current season, but life can change quickly so we will adjust our goals as needed if and when our life season changes.

Anyways, let’s start with our 2019 goals:

2019 Goal #1: Payoff car by October 19, 2019

In February, I published a post called Financial Independence on a Teacher’s Salary in which I discussed our goal that we created in our late 20’s of having all of our debt paid off (except mortgage) by the time my wife turns 35.  In order to complete that goal, we need to payoff our last loan by October 19, 2019.

We were on track to completing this goal until our flooding disaster last fall which my wife wrote an article called Hello Mauston. Not only did we lose our entire finished basement, we also lost both of our cars to the flood.

2019 Goal #2: Save $35,000

This is a pretty lofty goal.  Since moving to our new city and getting a new job, my income was decreased by $25,000.  That’s right, I took a pay-cut of over $25,000 when we moved and I couldn’t be happier with life right now.  With my lower income, we still set a rather lofty goal of saving $35,000 in 2019. To be clear, that’s $35,000 in contributions not market value.  

We actually set this goal at our last monthly household expenditure review meetings and made changes to our budget to try and reach this goal. $19,000 will go directly into my 403b, which will lower my take home pay.  That leaves $16,000 to save to reach our goal. By our calculations, if we are able to only live on my wife’s income, we will reach our $35,000 savings goal. That’s if we don’t overspend all year long and we don’t have anymore disasters.

2019 Goal #3: Maintain Healthy Lifestyle

I love bread more than anything in this world, but bread does really bad things to me when I step on a scale.  Last summer, I realized that things needed to change so I did what many people are doing right now and jumped into the keto diet. It was so hard! For 2 months, I was able to stay strict on keto and dropped 25 pounds.  It was a great feeling.

I’m now working hard every day to keep the weight off. I’m not fully keto right now, but working towards a healthier lifestyle with a bit more balance than keto allows.

Components of a BHAG

We learned earlier that a BHAG is a Big Hairy Audacious Goal.  I’m a fan of creating SMART BHAGs. SMART stands for Specific, Measurable, Attainable, Realistic and Timely. Here are the components for SMART BHAG setting:

  1. Specific: The goal should be clear and specific
  2. Measurable: We need to be able to track our progress. We are goal-oriented people and we need to be able to see progress.  We have charts posted in our house which allows us to track our progress.
  3. Attainable and Realistic: The goal needs to be challenging enough to motivate us, but not so challenging that it’s impossible to achieve.
  4. Timely: The goal needs a completion date.  Our BHAGs are set for 10 years.

BHAG #1: Payoff Mortgage

We bought our house about 1 year ago.  We financed our house for 30 years since we were moving to a new city and I didn’t have a job secured at the time.  We bought the house based solely on my wife’s income. She’s the breadwinner and I just live in her house.

We recently listened to a great podcast episode on ChooseFI where the guest talked about paying their house off in 5 years.  After that episode, my wife and I looked at each other and knew that was our first BHAG. Our goal is to payoff our house by December 31, 2029.  In order for that to happen, we need to pay an extra $775 on our mortgage every month.

Here’s the great news!  This BHAG ties into our 2019 Goal #1.  Once we payoff our car by October 19, 2019, we will be able to use the money that we’re paying towards that loan, $667, and move it to pay towards our house.  We will only need to find an extra $100 every month to make our first BHAG a reality!

BHAG #2: Save $450,000

Just like our first BHAG, this BHAG also ties into a 2019 goal.  If we’re able to consistently achieve our 2019 Goal #2, we should be really close to completing this BHAG.  It’s still not easily attainable though because there’s some room that needs to be made up based on our 2019 goal.  

If we’re able to reach these two BHAGs, it opens up so much flexibility for us. Luckily, we both love our jobs, but who knows how we’ll feel in 10 years.  If we want to pursue something different for even less pay or no pay, we can because completing these two BHAGs will allow us to not have to work for a w2 income anymore.

My Challenge To You

Set at least one financial-related goal for 2019.  Track your progress and report back at the end of the year.  I will definitely be publishing an article on our 2019 goals to see if we were successful or not.  My second challenge to you is to set at least one BHAG.

So that’s it, let us know in the comments below what your 2019 goal(s) and BHAG(s) are.  I’m excited you’re with us on this journey to financial freedom. Keep up the great work!

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Budgeting Starts and Ends with Us

[Editor’s Note: This is an independent post written by JJ. This post may contain affiliate links. Please read our disclosure for more info.]

On Friday, February 1, 2019, my wife and I had our monthly date night.  I made reservations for us at a new restaurant that had been recommended to us many times for their excellent atmosphere and food.  I left work to pick my wife up from our home and she looked absolutely beautiful. We got to the restaurant, sat at our table, and then it began.  See, this wasn’t an ordinary date and the conversation may not have been what you were expecting. 

The purpose of the evening was to hold our monthly household expenditure review.  Yup, that’s right. We were out enjoying each other’s company and discussing where every single dollar was spent for the previous month.  And this discussion happens every single month.

Our Why

We feel this date night is important on multiple levels.  The first is obvious, we need to be open and honest with each other about our spending.  I need to own up to my frivolous addiction to Diet Coke. Secondly, it allows us to have a conversation without all of life’s distractions.  It’s a couple hours of just us talking. No kids interrupting us every two minutes plus we put our phones away with the exception for taking pictures of our meals, because, well, we are millennials after all. Lastly, it allows us to dream.  We talk about life now and in the future, set goals and live how we want to live. Financial freedom starts and ends with controlling our spending.

2019 Goals

“We don’t know what tomorrow is going to bring so we plan for tomorrow (and beyond) with the information we have today.”

We start by ordering drinks and reviewing our goals for 2019 to make sure we’re taking the appropriate steps to meet those goals.  Typically, when we create goals we exceed those goals so we usually tweak them each month to make sure they’re not too easily attainable.  Our goals for 2019 include: save $5k in our emergency fund, payoff our small car loan by October, save $35,000 through various investment vehicles, consider refinancing our house to a 15-year mortgage, maintain our blogs (TeachFI and, maintain our morning fitness routine and healthy eating, and finish our basement projects. Check out why we have to re-finish our basement, ugh — flooding!

Long-Term Goals

Next, we review our long-term goals.  Within that conversation, we discuss the steps we need to take each year to ensure we’re meeting those goals.  Again, we tweak as necessary.  Life can change so quickly, so it’s important to be flexible. We don’t know what tomorrow is going to bring so we plan for tomorrow (and beyond) with the information we have today. Check out the post on our written financial plan for more information on our long-term goals.

Spending – The Envelope System

The next item on our monthly household review agenda is to discuss our spending for the previous month.  This is not an easy discussion, but my biggest piece of advice for managing finances is to understand where every dollar goes.  We are fans of Dave Ramsey and the envelope system [Purchase Total Money Makeover].  Linked here is a great explanation of Dave’s envelope system. We have an envelope for each of our main expenses.  At the beginning of each month, we allocate money to each envelope and then only spend the money budgeted in each of our envelopes.  We’ve been budgeting using the envelope system for over ten years. We have the following envelopes: groceries, household, restaurants, pets, date nights, JJ fun money, Jessica fun money and miscellaneous.  

Spreadsheets and Apps

Along with the envelope system, my wife and I really enjoy creating and managing spreadsheets.  Creating spreadsheets are great for planning purposes, but it can get difficult and tedious tracking every dollar.  A couple years ago, I found an app called Personal Capital [Sign Up Here] and am loving it, and it’s free! I have all of my financial accounts (bank, investments, car loan and mortgage) connected to my Personal Capital account and check on them daily. Personal Capital really helps us discuss our spending for the month. Another great app that people love is called Mint, which is also free.

Ahhh…We Overspent in January

Back to our expenditure review meeting, we realized that we had overspent in January, by a lot!  We don’t have a gas envelope because we put gas on credit cards to earn rewards, but something interesting was happening and my wife and I were both guilty.  We would pump the gas, then pay inside and get a coffee. It looked like the expenses were just gas when in reality, it was gas and a few extra dollars every trip.  We both owned up to it and agreed to discontinue. We also noticed a couple monthly subscriptions that were costing more and more. We talked about those monthly subscriptions and realized the convenience was not worth the cost.  We canceled those expenses right before we ordered dessert.

Speaking of dessert, wow!  S’more dessert with homemade graham crackers. It was so good!

Our evening ended with a tour and brief history of the restaurant. All cooking is done within the wood fired grill pictured on the right. 

We concluded our date night by realizing that we’re in a great position to continue to meet and exceed our goals. We are so excited to be on the journey to financial independence.  We can’t wait to share our experiences with our son as he grows up to ensure he learns sooner than we did.

Our next household expenditure review is set for Friday, March 1, 2019.

Steps to a successful Household Expenditure Review

Do you budget and/or track your expenses?  Have you tried Dave Ramsey’s envelope system? What are your short-term and long-term goals?

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