Eighteen months ago, I read Switch: How to Change Things When Change Is Hard by Chip and Dan Heath. This book changed my life.
Switch explores the difference between the life changes we eagerly embrace and those we struggle with our entire lives. The book radically altered the way I plan, budget, eat, sleep, and work. Thanks to Switch, whenever I warnt to change any habit in my life, I now think of elephants.
Let me explain.
Over the last few months, I've spent countless hours researching the process of selling items online for a large project I've been compiling. It's taught me that as much as I thought I knew about selling online, there's so much more that I have no clue about!
For example, a family member recently asked for my help selling an unneeded car on the internet. "Sure!" was my first thought. "Heck, maybe I'll even use this as a case study!" However, there's one major problem with this situation: I'm completely ignorant when it comes to cars.
Actually, I shouldn't say completely ignorant. That's not correct. I'm inexcusably ignorant when it comes to cars.
There I was, bustling around the kitchen making lunch for my daughter when our late morning routine was interrupted:Boom! Boom! Boom!
Milligan and I glanced toward the front door where the thunderous pounding had originated. "Holy cow!" I thought to myself, "There are only two groups of people who knock like that! This may not be good..."
Luckily, as I slowly opened the door, there was a stocky little lady in her late forties or fifties (with no badge). "Afternoon," she said. "I've some packages for you... several packages for you. I'm gonna need some help carrying these around to the door."
Courtney and I have recently stumbled upon a new hurdle in our personal finance journey: complacency.
You see, we've experienced just enough success to make us feel comfortable, but not enough to be even close to accomplishing what we want. We budget fairly well, we live on less than we earn (or right at what we earn), and we're able to explore passion-based income opportunities. On the flip side, we're still making far less than we're worth, we aren't saving for college or retirement, and we still have a bunch of student loans.
In our current situation, I'm always looking for ways to jolt our perspective and spark a bit more motivation. In the past, we've tried brainstorming more exciting ways to frame our goals, or sharing empowering stories we've read about from others' lives. These can work, but they've began to lose their effectiveness.
As some of you know, Courtney and I recently spent just under a year traveling abroad with our two-year-old daughter. A couple of months ago, we returned home to Indiana and decided that we'd take a six month break from our mobile lifestyle. Our decision meant we needed to start looking for short-term rentals that would meet our temporary needs.
When we started to browse rental options, we created a list divided into Wants and Needs. Some of the Needs included things like two bedrooms, a safe neighborhood, flexible lease terms, and some sort of yard or grass.
Under Wants we placed criteria like a standalone house, a fenced-in back yard, a one-car garage, and proximity to decent sidewalks or paths. Remember, we weren't buying a permanent home: We were searching for a quick six-month stop.
I struggle with weight. In fact, it's a far more difficult issue for me than personal finance. Honestly, I'm not completely sure why, but it's true.
There are many similarities between paying off debt and creating a healthy lifestyle. For starters:
- Correcting both issues starts with awareness. The key to turning around my financial life was realizing exactly how bad it was. After that, I was able to connect deeply with the burden that my lazy financial habits created in my life. While I understand that I'm unhealthy, I haven't fully connected with the burden it brings into my life.
- Both issues have simple solutions. Notice I said simple, not easy. Personal finance can really be boiled down to "spend less than you earn". There are plenty of details, techniques, and strategies, but it all comes back around to that one basic concept. Creating a healthier lifestyle is also simple: Eat fewer unhealthy foods, exercise more. Remembering these simple foundations can help us from distracting ourselves in a search for a mythical secret solution.
- Both issues require more motivation than "it's good for you". The vast majority of people who struggle with money realize that consumer debt is bad for them. Most people who carry credit card balances know "they shouldn't". But this doesn't keep them from doing it or help them from being susceptible to credit card tricks which can increase their fees. I know my diet is poor and I'm not as active as I should be. Just because eating better and exercising is "good for me", doesn't mean I'm going to do it. Sadly, most of us need more motivation (and more specific motivation) to overcome either issue.
Even though intellectually I can identify these similarities, I haven't been able to bridge the strides in my financial life to my health. I need more awareness and a more specific type of motivation. I recently stumbled upon an interesting concept that may help me with the latter.
In continuing celebration of Financial Literacy Month, my GRS contributions throughout April are covering basic techniques to raise your financial awareness. We've previously touched on the topics of debt and income. Today we'll tackle two of my favorite tips for ensuring conscious spending.
Purge your subscriptions
Subscriptions, even small ones, can sneak up on you. Every time you sign up for another recurring payment, you're locking in a portion of your income. You're tying up a specific segment of your budget.
Of course, some subscriptions are beneficial or desired. I'm not claiming all subscriptions should be avoided; however, it's important that we understand the nature of subscriptions. By nature, subscriptions make you less aware of the recurring purchase. Rather than reevaluate a purchase every month, a subscription ensures that you're charged regularly and obtain access to a benefit. Whether or not you're actually getting a benefit is another story.
In continuing celebration of Financial Literacy Month, my GRS contributions throughout April are covering basic techniques to raise your financial awareness. Last week we covered a few methods of getting to know your debt. This week we're going to attack the income side of the equation.
When it comes to income, there are two situations that can benefit immediately from increased awareness:
- An individual who earns a decent living, but is squandering their money.
- An individual who is not earning up to their current value (let alone their potential).
There are variety of causes for each of these scenarios. Lifestyle inflation could be causing a high-income earner to live paycheck-to-paycheck, a timid person may feel anxiety over negotiating a raise (even if well-deserved), or fear of failure may keep an entrepreneur from launching a much-needed product or service.
As you all know, April is Financial Literacy Month. To celebrate, my weekly contributions throughout the month will cover basic techniques to raise your financial awareness. In my opinion, raising awareness is the first step to tackling financial literacy!
When initially dealing with the problem of debt, many people suggest creating a list of each and every individual debt. I wholeheartedly agree. Creating a list of each and everything you owe is the best place to start dealing with a debt problem.
When creating a master list or your debt, you're striving to accomplish two things:
Courtney and I are big fans of what we call "mental filters". These are simple little tips and tricks that we can use to increase our financial awareness. (J.D. likes to call these tips and tricks money hacks.)
For example, I've talked before about how we taped a picture of our daughter to our credit cards while we were paying down our debt. Many people I know use some sort of 30-day rule to curb their impulse desires, especially those which contribute to clutter.
Both of these techniques are examples of deliberately installing a barrier between yourself and a routine action. Many of us do this in various aspects of our lives to help raise consciousness, but this technique can be particularly powerful in our finances.<