the long road aheadYesterday, Sierra wrote that she’s bored. She’s reached a point in her financial journey where nothing exciting seems to be happening. She’s paid off the easy debts, and now it’s a slog as she pays off her big debts (and then prepares to save for the future).

Ah, yes. I remember that feeling well. While I paid off my final debt — and again while I made the transition from debtor to saver — I sometimes found it difficult to maintain enthusiasm. Sierra’s on the right track: She’s decided to find ways to turn saving into a game. But today, I want to share some of the things I did when personal finance became a chore.

Note: In August, Alissa shared her reader story about paying down debt. She devised a great “game” to make the long slog easier: She created a paper chain that represented her debt. Each link in the chain represented $100, and as she repaid her debt, she cut apart the links. I love this. If I were tackling debt again, I’d do this myself.

Set goals
I’m much more motivated to save (or to pay off debt) when I have specific goals. My initial goal was to pay off my debt. I thought this would take me five years, but because of focused intensity, I was able to do it in just over three.

After I paid off my debt, I decided to save for a Mini Cooper. Though it took me almost eighteen months, I was still able to buy a used Mini much sooner than I’d expected. Why? Because the goal kept me focused.

Eiffel Tower at nightNow my goal is travel. I want to see the world. And, as you know, I’ve started to do so. We visited Belize in February, toured France and Italy last month, and will see South Africa next year. (Plus, I’m already thinking of saving for a trip to Patagonia. Chile and Argentina look amazing!)

These goals give me direction. Whenever I’m tempted to spend on something I don’t really need — an Xbox 360, for example — I remind myself what that money could be used for. Simple, but effective. And you know what? Sometimes I let myself change goals mid-stream. I recently pulled money from my Mini Cooper replacement account in order to fund our trip to Africa. I’ll start saving for the new Mini in 2011.

Boost income
Many people get stuck in a savings rut because they’ve cut all the corners they can, and there’s just nothing more they can squeeze from their budget. When this happens, I always offer the same advice: Boost your income!

For some reason — despite my exhortations (and those of my colleagues) — most people ignore the “boost your income” side of the basic personal-finance equation. (Which, you’ll remember, says that your wealth equals what you earn minus what you spend.) People go to great lengths to rinse out their sandwich bags and to make their own laundry detergent, but many won’t lift a finger to boost their income.

That’s a shame.

Why am I so adamant that boosting your income is crucial to financial success? You can only cut expenses so far. Eventually, you’re down to the bare essentials. When this happens, the only way to improve your circumstances is to earn more money.

This is also true when personal finance gets boring. When I found myself treading water, I decided to find ways to increase my income. I sold Stuff. I looked for one-time sources of income (like participating in a local university research project). And, of course, I looked for extra work. In the past, that meant holding two or three jobs at a time. More recently, that meant finding ways to increase readership at Get Rich Slowly or to earn more money from my writing. (Writing a book takes a long time and doesn’t pay well in an absolute sense, but that money is still money, and it funded two vacations this year!)

Find balance
Finally, remember to loosen up. Yes, it’s vital to pay off your debt. Yes, it’s important to learn how to save. But never forget that money is a tool, one that you can use to build the life that you want.

Saving became a slog for me when I forgot that it’s okay to indulge myself now and then, too. Remember when I griped about the cost of a movie? Remember when I whined about spending 87 cents on a mug of hot chocolate? Two years ago, I’d reached a point where personal finance wasn’t fun anymore. I’d become too frugal.

With your urging, however, I learned to loosen up. I realized that, if I can afford it and I’m meeting my financial goals, it’s perfectly fine to use money for fun. Comic books, Crossfit, and a Mini Cooper — it’s okay to spend on these things when my other obligations are met.

But loosening up didn’t come naturally. I had to adopt the Balanced Money Formula as a guideline to direct my spending. The Balanced Money Formula — proposed by Elizabeth Warren and Amelia Tyagi in their book All Your Worth — is based on your net income (your income after taxes). Warren and Tyagi say that, ideally, no more than 50% of your paycheck should be spent on Needs (and keeping them below 35% is best). Of the remaining amount, at least 20% should be devoted to Saving, while up to 30% can be spent on Wants.

Here’s what it looks like:

That’s it. Simple. Three categories. No detail. This is the sort of Big Picture budget that I find useful. In fact, it revolutionized the way I look at money. It helped make saving fun again.

Note: For more complete information, see my description of how the Balanced Money Formula works.

Not a chore
Too many people think that personal finance is all about self-denial. It’s not. If you’ve made poor choices in the past, you may need to make some short-term sacrifices in order to get out of debt. But for me, smart personal finance is all about self-fulfillment. It’s about deciding what’s important to me and then finding ways to fund these things.

I know from past conversations that many of you have faced a similar dilemma. (Probably some of you still see personal finance as a chore.) How do you take the drudgery out of personal finance? What has worked for you? What hasn’t?

Long road photo by qmnonic.