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What’s Your Five Year Plan?

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Having a long range plan is critical to making correct financial decisions. Flexo at Consumerism Commentary has blogged about the latest buy vs. rent article to hit the streets, this time written by Liz Pulliam Weston. Flexo writes one interesting tidbit that I found troubling… not knowing if he’s staying in an area “is the main reason [he hasn't] purchased a house yet.” He adds: “I don’t know where I’ll be, and frankly I’m not quite happy I’m still in the same place I was three years ago.” This underscores the importance of having a plan.



Neither easy to devise or certain to finish, a long term plan for what you want to do is necessary for any meaningful financial decisions in your life. Be it five years, three years, ten years, or two – you need to know where your going in order to steer the ship.

What is my long term plan? My current plan is 3 years long and it involves completing a part-time MBA program at Johns Hopkins University. In that time I hope to advance in my career in my full-time job, continue to grow and nurture this blog, and otherwise enjoy my personal life. That plan means I’ll be here for the next three years at a minimum which makes it stable enough for me (even if it’s short by the typical rent vs. buy rule of thumb) to confidently purchase a home. If I was in Flexo’s position of not knowing how long I intended to be here, then I would also made the same (correct) decision he did and not purchase a home at that time.

It’s difficult for someone who has just left the academic (such as myself) or military system to figure out what their long term plan without sitting down and actually thinking about it. You find yourself without clearly defined goal posts and it’s hard to make decisions. In academia, you look towards graduation. In the military (I assume because I have no experience in this), you look towards the end of your service in however many years. Now, you can’t possibly look forty years and have your goal be retirement… it’s simply too far off.

Find some intermediary goals such as X years to a promotion or Y years to starting a family. It can be as short as 1 year to figure out if your current job or location is where you want to be or do you want to sample another part of the country or the world. After you figure out your long term goal, which can evolve, you can decide whether you should buy a house or make some other large decision (financial or otherwise).

So what’s your long term plan?

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32 Responses to “What’s Your Five Year Plan?”

  1. SELF says:

    lauren-
    Now that you have started your planning lets start with the big “when”.
    Plan a. Goal appears to be the house you currently live in/around/near your current neigborhood. And it looks like your starter home will not be flipped (resold) for profits to upgrade to another. Instead itis a starter nest. So,if I may be so bold … when do you plan on having your first child or how soon after you move into your home?

    I ask only because this will be a major event your life (financial, emotional, spritual, physical etc). Start from there and plan back to today.

    Would you consider a plan b. saving 40k in 2.5 year , purchasing a 40k starter fixer upper house, that you rent out, fix up, rent out (your location and circustances would dictate the best course) hold for 2.5 years and either sell or take out the equity and to use as part of the down payment.

  2. SELF says:

    jim, notice in your photo a hp. perhaps a pavillion?

  3. jim says:

    Self – Yessir, it’s an HP Pavilian XT395 I bought second-hand about four years ago.

  4. SELF says:

    jim, got mine on november 04, on sale for less than $800. infected only twice. had to complete reformat only once. just trying to count my blessings.

  5. Lauren says:

    “Now that you have started your planning lets start with the big “when”.
    Plan a. Goal appears to be the house you currently live in/around/near your current neigborhood. And it looks like your starter home will not be flipped (resold) for profits to upgrade to another. Instead itis a starter nest. So,if I may be so bold … when do you plan on having your first child or how soon after you move into your home?”

    Hoping for a year or so afterward, if we can afford it.

    “Would you consider a plan b. saving 40k in 2.5 year , purchasing a 40k starter fixer upper house, that you rent out, fix up, rent out (your location and circustances would dictate the best course) hold for 2.5 years and either sell or take out the equity and to use as part of the down payment.”

    There aren’t any 40k starter fixer upper houses around here, unfortunately. You can’t get any single family homes under $350k. You can get a 2 bedroom condo, but we didn’t feel that that would offer enough space to be worth it in the long run. Ultimately I think the solution is to leave the area, but there are other things to take into consideration other than housing prices.

  6. SELF says:

    lauren, a condo would be a great short run plan. easier to unload to starter couples. has the condo market shown reasonably steady equity appreciation in the area?

    other benefits may include: getting your feet wet in the purchase/selling process, tax breaks, home ownership credits, home ownership priviledges with vendors, addition to your asset column, rental income, still have cash for savings/retirement accounts.

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