“In preparing for battle I have always found that plans are useless, but planning is indispensable.” — Dwight D. Eisenhower

Bottom Line Up Front (BLUF)

I received several comments in response to my last post from people who were receptive to the idea of Financial Independence (FI) save but one factor – the amount of time it would take to figure out how to achieve that goal.  I get it.  Life has a knack of interrupting attempts to plan long term.  From babies to hobbies to the day to day grind of work.  There just is not enough time in one day, one week, or one month to sit down, study the problem, and conduct the planning that FI requires.  No doubt FI takes time – I used a three month Temporary Duty (TDY) assignment to develop my plan.  Since I was separated from my family, I decided to put my time to good use.  However, you may not be so “lucky” as to get three months of TDY from life’s other responsibilities to conduct FI planning.  If lack of time is your biggest obstacle to planning for FI, attached is an outline to follow in an attempt to save you some … time.  Depending on how well you track your finances, using the outline will probably cut your required planning time in half.  Speaking of the need to track your finances, if you do not already do so, please read my post on the need to track your finances before going any further with this one.

Some Questions You May Have

What method do you use?  I use the GROOW method, or as I like to call it the GRO2W method.  GRO2W stands for Goal, Reality, Obstacles, Options, and Way ahead.  It’s a method for goal setting and problem-solving that “Life Coaches” use to help their clients.  I found the GRO2W model particularly well suited for FI  planning.

Will it be a 100% fit for me?  No.  Everyone has different financial circumstances that might dictate a need for either a simpler or more detailed planning method.  Harold Pollack recently made the Washington Post with his 4 x 6 note card (picture below) filled with what he claimed was all the financial advice a person might ever need.  He wrote nine pieces of advice or steps to take, and all but one of them appears to be perfectly valid advice based on the most current research in the personal finance industry.

Harold Pollack’s index card of finance tips. Picture by Harold Pollack

Another website I recently discovered has boiled everything down to three steps: Earn, Save, and Invest (ESI).  Something that simple may be more suitable to the particularly money savvy or frugal.  The rest of us, myself included, are probably better off with a few more steps and details in our planning method.

Is it guaranteed to work?  Nope.  I offer no guarantees when it comes to something as nebulous as planning for the future.  I would refer you to the quote by Dwight Eisenhower above referencing the value of planning vs. the plan itself though.  Even if this method does not produce a workable plan, I would argue that you would be in a much better place having conducted FI planning than had you not.

Shouldn’t I hire someone to do this for me?  Maybe, but only after you consider the following points.  There is an entire industry out there devoted to Financial Planning that would have you believe it requires special voodoo magic skills to do this; all while they try to sell you their products and services in order to “solve” your financial issues for a slick 1 to 8 % commission.  In fact, beyond your time, it does not require anything more than an ability to read, comprehend, and some basic math skills.  Can you add and subtract? Good, you qualify.

Certainly, not all Financial Planners are out there to fleece you; especially the ones who operate by the Fiduciary Standard.  However, all of them cost money and even those who operate by the Fiduciary Standard face conflicts of interest with the various compensation methods that serve as industry standards.  Furthermore, there is a large and growing body of evidence demonstrating the irrecoverable negative effect that active management fees cause a portfolio.

Need some more convincing than just the ramblings of some guy who decided to start a blog?  Good, it pays to be skeptical when it comes to your money.  I could be wearing a tinfoil hat for all you know.

Yes, that could be me …

I would suggest you find a copy of Nate Silver’s book, The Signal and the Noise, he has an entire chapter devoted to the issue written in much more elegant prose than yours truly can manage (**Please note the Grumpus Maximus is an Amazon affiliate.  See disclosures for more information**).  That chapter was the straw that broke the proverbial camel’s back for me.  Don’t trust some author you’ve never heard of?  Nice, that was a test and you passed again.  How about the Securities and Exchange Commission (SEC) then?  They produced this short pamphlet with pictures (and words) demonstrating the effect of fees over time.  Maybe I was wrong about the need for math skills…

Putting my snarkiness aside, if you feel like this is something that you cannot do by yourself, I would recommend a fee-only advisor (think of it as pay as you go for their advice).  They tend to have the least conflict of interest, but could still prove expensive depending on the type of services you want.  Honestly, I do not know how expensive since I never used a fee-only advisor (although I wished I had rather than paying a full fee advisor for several years!).  Check out the website NAPFA.org for the details of a fee-only advisor in your area.  Also go into the interview (yes, you should interview your advisor like you would a nanny or employee) armed with these questions.

With all that said, it remains my humble opinion that you can do this yourself.  I did, and I am a liberal arts major after all.  Besides who do you think is going to look after your money better than you?

So if you are still interested click on the link to go to Part 2 of this Series!