Matching Financial Tactics to Your Goals. Don’t Think Like a Race Car Driver.

The other Saturday I went to the drag strip with some friends of mine. It’s an annual event for us. We’re a bunch of car enthusiasts who get to spend a day with some truly amazing equipment. For those of you who are not familiar with drag races, here’s a brief explanation. Each race is a two-car competition to see who can cover an 1/8 or 1/4 mile in the fastest time. They both start from a standstill. An electronic signal tells them when they can go.

And then they explode off the starting line to cover the agreed distance (which is set at different lengths for different classes of cars). Huge tires spin trying to get traction. Smoke fills the air. The sound of the engines is earsplitting. An extraordinary amount of power is unleashed in just a moment. You can’t help but be impressed as these cars go from a standing start to over 200 miles per hour and cover 1/4 mile in just seconds!

There were some exceptions. Not every car was designed just to go as fast as it could. Some were built with a sense of humor. For instance, someone had a car that looked like a small railway engine. As you can imagine, it attracted a lot of attention from the kids! I’m sure it goes fast, but that’s not its sole purpose. It was also meant to create a few smiles!

I had a great time. But, unlike my friend, who has been a drag racer since his teens, I tend more toward classic and custom cars, which are an entirely different breed of car. They’re often restored to like new condition. Or, in the case of customs, they are modified into a work of art in sheetmetal. They’re driven with extreme care to minimize any chance of accidents or paint chips.

One frustrating thing about a day at the drag strip is the occasional car that has an equipment failure on the track. We saw one where the differential blew up and spewed grease for 1/16 mile. It took the clean-up crew the best part of an hour to make the track safe to use again. During those cleanup times, you get to swap stories with your friends and other spectators (some of the stories are even true!) or go down to the concession stand to pay for an overpriced hotdog and drink.

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Sometimes in those quieter moments, I tend to think of how life illustrates our finances. This happened to be one of those cases.

It occurred to me that just as dragsters and classic cars are different and well-suited to their purpose, so should our financial tools and methods be chosen for the goal we want to achieve. Let me try to draw an analogy that makes sense.

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You’d be foolish to take a classic car that took years and many dollars to restore and run it on the drag strip. One trip could ruin paint you spent hours polishing or break parts that you can’t replace. That classic car’s purpose isn’t to go fast. If your goal is to go fast, you’d be much better off to use a dragster. It is designed to accomplish your purpose.

The same thing is true of our finances. We need to know what our goal is before we decide which method to use. Take, for instance, our desire to get out of debt. We’d like to use a dragster to solve the problem. With a quick burst of effort, the whole deal is over quickly. But, conquering debt doesn’t work that way. Chances are we built up the debt over years and years. We’re not going to get rid of it overnight. It’s going to take a longer, more dedicated effort to keep on repaying past debts for months and even years. This is more like our classic cruiser than the dragster.

We’ll need tools that can help us select which debt to pay first, ways to keep track of what progress we’re making month by month, and even some rewards as we hit the quarter and half-way point to keep us motivated to continue pushing to our goal of being debt-free.

Just like the cars, we need to be tuned differently too. We all know someone who starts a financial program with a lot of tire smoke. They travel the first quarter mile quickly, but then they lose interest and don’t make any real progress towards their goal.

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It’s not how much enthusiasm we bring to the starting line that counts. Rather it’s the determination to continue to journey even when it’s tough to go on and when events make it hard to stay the course.

On the other hand, our goal may be to get the best deal possible on a new refrigerator. This time we need to select tools and techniques that will help us right now. Knowing where to find reviews, looking for discounts, and brushing up on how to negotiate are all immediate activities. This time the amount of energy we bring to the task today is really important, which is much like the dragster taking off. A cruiser will not get the job done. We need our tools to work together right now.

So as we set financial goals, both now and as part of New Year’s resolutions, don’t forget to make sure that you’re driving the right financial tool or technique. Failure to get this right could leave you standing along the money highway waiting for a tow truck!

Gary Foreman is a former financial planner with over 30 years experience in getting value for a dollar. He currently writes on personal finance and edits The Dollar Stretcher website. You can follow Gary on Twitter.

Gary Foreman is a former financial planner and purchasing manager who founded The Dollar Stretcher.com website and newsletters in 1996. The site has an active section for baby boomers

He's been featured in MSN Money, Yahoo Finance, Fox Business, The Nightly Business Report, US News Money and CreditCards.com. You canfollow Gary on Twitter.
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