The Best Defense is a Calculated Defense



Not quite how the saying goes – “Best defense is a good offense” – why does one strategy have to replace the other?  As argued in Maximizing Value and Earn More, Spend Less – you need both components to be most effective.

Keeping with the analogy, think of the top team in your favorite sport.  What do they have that sets them apart from the rest?  Most likely, it’s strong offensive AND defensive players.

Bad news is you’re your own team.

Good news is you can play both roles.

Much like a mid-fielder in soccer or center in hockey, those players must juggle their different abilities in whatever ways will most benefit the team.

Without even realizing it, you’re probably already engaged in this balancing act.  Saving for retirement is a defensive strategy.  Seeking out different investments for your retirement savings is an offensive strategy.

But, we all have our financial Dr. Jekyll & Mr. Hyde moments when our stronger preferences overpowers our weaker ones.

These moments can be devastating financially.  Great investment returns are canceled out with high-interest loans or emergency savings can be wiped out with not-so-emergency expenses.

But overcoming these hurdles can be quite easy.

Again, look at any sports example.  Games are won and lost by 1 point. Strengthen your defenses by making each move deliberate and calculated.  While your offensive skills may be weak right now, making your defenses impenetrable will ensure you “win the game” (of financial security, that is).

One of the weakest components of personal finance seems to be simple budget planning.

Being an engineer, I have a fixation with graphics and charts.  I also have reports to track my progress for past comparisons and future projections.  I can tell you what my monthly, quarterly, and yearly expenses are.

Why is this important?  Because the first of the month, first of the year is a big 1-2 punch.  My regular, monthly expenses along with the once-a-year charges all come due.  Knowing this time will come, I put the brakes on spending and hoard cash reserves for the 2-months prior to make sure I have enough buffer to weather that time.

Sometimes it isn’t the regular expenses, but those irregular-regular expenses that catch us off guard.  And being caught off-guard while playing defense is what loses games.

Alright, now that you’re fired up with that coach pep talk – what’s a calculated defense?

  • Anticipating

Any premeditated action starts a “calculated defense”.  Whether it’s anticipating next month’s electric bill, next year’s taxes, or something decades from now like your kid’s college, all of these will eventually come due and require your attention.

  • Assessing

Now that you’ve anticipated what’s heading right at you, it’s time to assess the situation.  How will you maneuver around this?  What’s the potential damage TO you?   Where can you CAUSE the most damage?

  • Revising

Let that amazing little computer known as your brain, take the observed information from the assessment and run various tests.  VERY IMPORTANT stage as putting new information into the equation may significantly change the output.

  • Reacting

Not much here. Time to act! Let your plan be your guide, and crush the opposition with your rock-solid defense!

And if you ever forget the acronym, just imagine yourself as a

300-pound linebacker charging towards a puny runningback yelling


Readers: How often do you pre-plan your finances? Do you ever revisit those plans after you receive new information?  How successful have you been with those calculated defenses? Has it ever failed you? Share your thoughts below.

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4 Responses
    1. Fin Engr

      @ MFO. You stand corrected! See comment by Monevator. On the whole though, I think you’re right. Thanks for stopping by.

  1. “AARR” – That has to be the coolest new acronym of 2010. I can quite easily picture myself about to be flattened by 300lbs in a crash helmet.

    To be honest I’m unusual among money bloggers in that I don’t plan or budget much at all in the short term.

    I have medium range goals (such as filling up my tax-exempt accounts every year) but in the short term I try to let cash pile up to create a buffer, then try to get it invested ASAP.

    i.e. My default assumption is most of my cash will be saved!

    This has been much harder in the past 18 months admittedly, with the downturn. But I know if I budgeted too often I’d lose interest.

    I should stress that once a year or so I do go through my expenses and see what can be cut out, and I’m also instinctively pretty frugal.

    Oh, and this is possible because I’m single. Again, with a family I’d have to budget I’m sure.

    1. Fin Engr

      Thanks :) Arose from my frustration with figuring out how to close the post (argh).

      Not completely unusual. Plus, you’re planning medium term goals so you’ve still calculated a defensive strategy. I had a friend who actually carried around an accountant’s ledger and documented every purchase, expense down to the penny. Now THAT seems obsessive.

      Good point on filling up the tax-exempt accounts. I’m planning on writing an article (#3 in the queue) about squeezing some extra return out of early contributions.

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