I joined Pure Financial’s Your Money, Your Wealth with Alan Clopine, CPA, AIF and Andi Last, Media Manager, to discuss 4 Simple Ways to Keep Your New Year’s Resolutions using strategies that helped me break down my financial goals into manageable pieces as I achieved debt freedom and turned my focus towards building sustainable wealth. Eighty percent of individuals will give up pursuing their New Year’s Resolution by the second week of February. If you want to be apart of the 20-percent that sees their goals to completion, here is a summary from the show for you to consider as you develop personal and money goals throughout the year, as well as learning about the equally important mid-year resolutions check-in.
Debt Free or Die Trying, Not Debt Free Until Moderately Inconvenienced
We are actively building a four week course that will simplify my Debt Free or Die Trying book series into a simple 4-step lesson plan. I first outlined my “D.E.B.T.” plan in an interview with CBS News on their How to Rebuild Your Credit segment. Subsequently, Forbes ran a full feature with a more detailed breakdown, How to Kick Debt to the Curb. A simple overview of the plan:
- D – Define a plan / Define the problem (week 1)
- E – Establish a plan of attack (week 2)
- B – Build a budget (week 3)
- T – Trust the process / Time will pass on its own (week 4 – debt free)
While most people leap to the spend-cutting or budgeting part of their
At age 22, I managed to spend $26,000 in debt in less than 72-hours, so I know a little something about living outside of your means. Like in the scary movies, the call may be coming from inside the house. This could be as simple as making the mental change necessary to have the discipline to stick to a debt free plan or as complex as coming to the realization that your financial circumstances may dictate that your journey to debt freedom will take years to complete. Either way, if you don’t embrace the reality of your circumstances sooner than later and break out of the paycheck-to-paycheck cycle, you’ll soon find yourself right back with the 80-percent group of failed New Year’s Eve resolutioners.
For instance, in my book when I described “rock bottom” — age 22 with over $30,000 in debt and pleading with creditors for consolidation loan forgiveness programs — I decided that night I would never put myself in such a dire financial position again. When I woke up the next day, nothing had changed about my income (I was already physically, mentally, and hourly maxed out since I was working three jobs anyway). I didn’t suddenly have an epiphany that led to more money, quick riches, or instant savings. However, I had finally changed my mind about how I was going to spend my money. I didn’t know how, but I did know that I was no longer going to let debt control my life. The major difference maker?
There is plenty in our lives that is outside of our control. In my experience, most people gravely overestimate what is outside of their control and underestimate what is in their control to their own detriment. Further, if you assume most everything is outside of your control when bad things happen to you, it’s a self-fulling prophecy that justifies your preconceived notions that there was nothing you could do about it anyway. In my situation, every night leading up to rock bottom I was my own worst enemy. I was more responsible with money at age 16 (literally limited by cash), than at age 18 when I got my first credit card and started spending whenever I wanted on whatever I wanted. On the night I reached rock bottom, I made a promise to myself that I would take back control of my financial life. Then, I kept my promise.
The Major Key to Completing Your Big Goals is to Finish Little Goals
By extension, if you want to keep your big New Year’s goals, the key is to break them down into smaller pieces. Here’s the recipe for sucess that worked for me but you can develop your own secret sauce:
- Whiteboard (Ok, it’s a vision board but if you call it that to my face I will challenge you to meet me in Temecula.) – write down your goals in a visual place that will help (force?) you track your progress and revisit them until they’re completed. You can change the recipe at any time, but the final destination should stay the same: successfully meeting your goals.
- Break big goals into smaller, manageable pieces – I like to revisit my BHAG goals at least quarterly (every 90 days). I break my smaller short-term (accomplishable within a week or less) and long-term (1 month or longer to achieve). Bonus Tip: To break out of the procrastination box, immediately start and complete all goals you identify during the year that will take less than 2-minutes from start to completion.
- Break larger goals into sub-goals – make lists. Lots of lists. For example, at the start of 2019 I had 23 in-progress lists; many with their own specific Action Items. You don’t have to be as crazy as me but you get the point. If I can maintain 23 lists, you can surely maintain one. If you prefer automated tools, my favorites are Trello and the iPhone’s ‘Notes’ or ‘Reminders’ app.
- Record and track progress and unexpected changes – take pictures, share on social media, or designate an “accountability partner” aka the person(s) that will make sure you get back on track when you fall off.
Making More Money is as Important as Spending Less Money
One of the favorite refrains of the personal finance community is, “spend less than you earn.” This statement is not inaccurate but it’s not all encompassing either. Frankly, sometimes it is also tone deaf. If people were exclusively driven by logic and math, the community itself would be out of a job and debt wouldn’t exist. Therefore, spouting this mantra from the heavens as a panacea is naive at best.
Now I will admit that there are way too many people whose only real “fatal” financial diagnosis is they spend way too much money each month compared to how much money they earn. For those individuals, spending less, living within their means, and sticking to a budget is the cure to all their alleged financial ailments.
However, there is also a significantly large group of Americans that have an income problem. Knowing whether you have a spending surplus is equally as important as knowing whether you have an income shortage. This is why I like the personal finance remix, “spend less than you earn, or earn more than you spend.” For more on that, check out our episode with Paula Pant on why you can afford anything but not everything.
I like this remixed quote because it gives leeway to the realization that some people simply do not make enough money to follow what many assume is personal finance 101. For those individuals, their step 1 isn’t to spend less. Step 1 is figuring out how to make more. I like the well-written piece on this topic penned by Hanna Olsen in 2017, If You’ve Never Lived In Poverty, Stop Telling Poor People What To Do.
For example, I’ve often been broke, but I’ve never been poor. I try not to confuse the two when offering my money advice. Put another way, don’t let anyone that didn’t help you make it dictate how you spend it. It’s your money to enjoy. For context, I typically define the difference between the two as: broke is a state of mind where you can never afford everything you want; whereas, poor is a monetary state where you can’t even afford what you need. Once Papa secures the bag, he can always find a reason to justify a brand new pair of shoes if you’re picking up what I’m putting down. There is a very real possibility that I’ll always be “broke,” because no matter how much money I make, I’ll always find a way to want more stuff like this couple living paycheck-to-paycheck on $500,000 a year. More money, more problems implies broke people are problem-free. Look, we all have problems. The difference is whether I want broke-people problems or rich-people problems? The choice is obvious to me.
To wit, if you can afford to be broke, then you are already more privileged than most individuals. Keeping this perspective helps me better define my boundaries and stay in my lane when offering solicited or unsolicited advice. I am familiar with renting space in mental broke-ness, but I can only relate as an adjacent neighbor to my friends living permanently in poverty. This is why I do my best to meet people where they are in their financial realities rather than project my own conclusions onto them based on my limited life experience. Just because the personal finance community is a chorus doesn’t mean we always hit the right notes. Instead, the best financial plan is the plan that works for each individual and that might not be the same achord everyone else is hitting.
There are Plenty of Ways for Anyone to Make More Money But Every Way to Make Money Isn’t for Everyone
On Your Money, Your Wealth, I was asked to share ways to make more money. What I have found in my extensive research is that while the methods to get more money may change, the principles for making it generally remain the same from generation to generation. Basically, you can work more hours and trade time for money, you can invest, or you can do a lot of work upfront for residual/passive income from your initial investment.
Unfortunately, although I have tried quite a few during my decades on this Earth, I have yet to find a get rich quick scheme that consistently works. To be fair, even a well-timed idiot can get rich once if they are in the right investment at the right time but just because a broken clock is right twice a day doesn’t mean you should set your watch by it. Further, using a down stock market in any given week as justification to never invest over a long-term horizon is like using today’s sunset as evidence that the sun will never rise again. Anything is possible but I’ll play the odds it will come up again. As I’ve grown comfortable in my Senior Millennial years, I prefer proven get rich slowly schemes because while I have exquisite taste when it comes to blowing money fast, I have a much lower risk tolerance for losing it fast.
In fairness, you’re probably still bright-eyed, bushy-tailed and a young, vivrant thing, so you have no time for my old-man speak of slow money is better than no money. If you’ve still got the benefit of energy and youth on your side that I only have in the memories of my yesteryears, then this piece from MarketWatch is for you: One guy asked the internet how to make $2,000 a month in passive income. Here are the answers, as well as the viral piece, Every 25-year-old in America needs to see this chart right now.
Similarly, I could list as many ways to make more money as I have fingers and toes, but none of them matter if they don’t fit within your priorities. By priorities I mean you are probably a person who believes they don’t have enough time. Everyone has time; “enough” is subjective, yet most people believe they lack whatever the amount is they need to do whatever is they want to do. Hardly anyone has exactly zero-point-zero hours left in any given 365 day period to spare. I get it: work hard, rest hard. You have just as much right to rest as you do to work as long as you accept that your choice to rest when you’re not sleeping is a personal one.
The average American adult somehow finds enough time to watch 6-hours of TV (or Netflix) while playing online two additional hours, every day. Given how averages work, this means half of Americans spend more than these six plus two hours chilling. Given how the internet works, everyone reading this sentence will believe they fall into the other half of Americans that chills less. That’s why you never have enough time.
True to my principles, I’m not saying you have to give up any of your pastimes. Instead, the “work smarter not harder” route is to figure out how you can combine or convert some or all of those pastime hours into paid hours. What are your options? Why are you asking me when we all have access to the same Google?
Few of the financial means you find in your search exercise themselves if you’re inactive in your pursuit. I’m actually very lazy but I know how math works and I like money. For my lifestyle, I had to find a way to be lazy while making money. In my example, because I’ve already written two books and I’m passively working on a third, I can now Netflix and Chill at 36 while simultaneously sending pre-scheduled social media references to buy my book or visit the podcast because of work I did in my early 30s. You don’t have to be a physic to predict that work done today will pay off tomorrow. With a little bit of strategy and work, the past can have residual benefits to your future.
Sure, Elon Musk says, “people need to work around 80 hours per week to change the world.” That’s great for Elon Musk, but I’m not trying to change the world. I’m trying to change the number of commas in my checking and investment accounts. Given that my goal is much smaller than “change the world,” I don’t have to work 80-hours. Twenty hours is more than sufficient. If your goal is to change the world,
The days will go slow but the years will go fast if you’re not careful. Because of work I did over six years ago, today requires hardly any new activity to reap additional financial gains. Whether I Netflix and Chill or do more work today, I’ll get paid while I sleep. Today I’m working on more passive income streams that will pay off years down the road not because I desire to work more in my 40s, but because I want to work less! If I’m working harder at 40 than 30, then listen here brother, I failed. This isn’t a unique story. You just have to find out which get rich fast/slow scheme works for you and how many extra hours of work you’re willing to do to get there. Lastly, if you don’t know where to start, you could do a
As a older well-paid mentor advised me once, “you have to work really hard to get to a place where you
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