“31 Days to Financial Independence” is an ongoing series that appears every Thursday on Money360. You might want to start this series from the beginning!
In the first part of this series, we took a long look at the things that shape our lives – the things we spend our money, time, and energy on – and figured out which ones were most important to us. More specifically, we chose roughly five things that were of prime importance and five more that were of secondary importance. Going through that first exercise is vital for everything that follows, so before you continue, take some time to jump back to that first exercise and try it. It’s an essential exercise for figuring out your path to financial independence.
The key thing to remember with that exercise is that you’re figuring out what areas of your life are “deep” and which ones are not. The “deep” areas are the ones that you’re willing to devote your spare time and energy and your money to, both in the sense of enjoying those things and in the sense of preserving and securing those things for the future. The other elements of life – the things that you find less important – are things that you can and should cut back to an absolute minimum.
This kind of shift – going deeper on the things you really care about while stepping back from the things you don’t care as much about – is easier said than done, but I consider it an absolutely essential key to successful personal finance. The reality is that many people get themselves into financial trouble by spreading themselves too thin. They try to spend money on every whim that crosses their path, but in doing so find that they don’t have nearly enough money left over for the things they care about most. The same phenomenon is true for a person’s money and energy – they waste it on things of lesser importance and find that they have little left for the things that they really care about.
Great, but what on earth does all of this have to do with fixing my finances!? I need help with my debt! Here’s the reality of it: the reason you’re in debt is because you’ve stretched your life an ocean wide and only a few inches deep.
You’re devoting money to all kinds of things that are really unimportant in the big scheme of things, but the modern world and all of its marketing and distraction has convinced you that many such unimportant things are vital to you. So you give it some money – you buy some things – and maybe you give it some time, too, but not enough of either to really make it meaningful and worthwhile.
To fix that, you need to start with some real life basics, and that’s what the first steps of truly fixing your finances are all about. It’s all about figuring out what you really care about, giving those things proper feeding and nutrition, and then cutting back on all of the stuff that you don’t really care about all that much.
Once you start really committing to those kinds of changes – and we’re heading right down that road – what you’re going to find is that you’re suddenly spending a lot less money and you suddenly have more time and money for the things that you care about. You’ll have money left over each month with which to tackle that debt.
Here’s the reality about debt: you can’t really tackle it unless you’re consistently spending less than you earn, and you probably didn’t build up debt unless you’re consistently spending more than you earn. Something has to change before you can transition from consistently spending more than you earn to consistently spending less than you earn. I consider that to be the first and most fundamental step of personal finance change, and that’s the exact thing we’re addressing right now.
So let’s get on with it, shall we?
The problem at hand is the idea of being spread too thin, something we started to address in the first day of this journey to financial independence. How can a person fix that problem? I don’t think there is a ready-made answer that works for everyone, unfortunately, but what I can talk about is what works for me. Figuring out a strategy for dealing with this conflict has been utterly transformative in my life, giving me the time and space and resources to really commit myself to things I care about without feeling overcommitted.
For me, the solution has been establishing what I call “deep” goals. These are very long term goals that I set for my life as a whole that turn the vague “deep” areas of life that we established last time into something more tangible, concrete, meaningful, and exciting.
At the same time, in order to find room for these ‘deep’ goals, I commit myself to cleaning up the shallows – dealing with the difficulty of letting go of some habits and responsibilities that a person has recognized as being less important in life.
Here’s your game plan for doing just that.
Exercise #2: Establishing ‘Deep’ Goals and Cleaning up the Shallows
During the previous exercise, we focused in on identifying three or four key areas of life that really mattered to us, as well as five or so secondary areas of life that were important but not quite as vital. The idea behind this was that these were the areas that we would go “deep” on, committing adequate money and time and energy to, and we would allow the other areas of our life to go “shallow” (committing minimal time, money, and energy).
For me, this list of items ended up looking like this:
Being a good husband
Being a good father
Learning new things
Playing board games
Getting in better shape
Having a rich network of friends
Being involved in a couple of community groups
This is what really matters to me in my life. I’m family oriented, I value personal growth, I like activities that make me think, and I want to be a strong participant in my community. That really describes me well, at least in terms of what I most care about.
As I said before, your list will probably be different. You may even find that, as you reflect on it, some surprising things bubble up to the top, while some other things are really unimportant to you.
A person’s life should center around those key things and the things they need to do to preserve them. Everything else in life should involve minimal distraction in the form of money, time, and energy.
The thing is, while I’m excited about each of these areas in my life, many of those areas are also nebulous. They might describe something a person can be doing… but how exactly does one “be a good husband”?
More than that, these things don’t really help me decide things to do today that really help me live out these things. (I’m not really going to tackle this on day #2… that’s going to be day #3… but it’s worth mentioning here.)
So, let’s start bringing these things to life.
First, ask yourself what exactly you would need to do to feel as though you have accomplished a specific item on your list over the next 10 years. Yes, we’re thinking big here. Why? Big things inspire us. They feel challenging, sure, but they make us feel like we’re really changing our lives and achieving something… and we are.
Let me pull out a few items on my list and show you what that looks like.
What exactly do I need to do to be a good husband over the next 10 years? Be a consistent listener and communicator. Support my wife in her choices. Make her laugh and smile. But what does that all boil down to? It adds up to committing time regularly toward supporting her in whatever way she needs.
So, here’s my goal: I will support Sarah to a depth that exceeds what I would want her to support me, regardless of momentary reciprocation. In other words, I will actively be there for her for whatever she needs – an ear, a kiss, some companionship, a laugh, a helping hand, honesty. (We’ll worry about specifics tomorrow.)
What exactly do I need to do to become well-read over the next 10 years? I think it would involve reading a large number of meaningful and thought-provoking books, not just page turners (but a few of those, too). A book, to me, is meaningful if it changes how I see the world and it’s thought-provoking if it makes me think.
So, here’s my goal: I will consistently read challenging books and progress through them at a steady, strong pace. This is reasonable because, if you notice, this is one of my major forms of entertainment going forward. I’m essentially saying that a significant chunk of my free time is going to be devoted to reading challenging books going forward.
Notice that this does not include buying books or owning books, but reading them. Going to the bookstore does not fulfill this goal. I should try to get these books as inexpensively as possible, which means I’m going to be hitting the library a lot.
What exactly do I need to do to be a good father over the next 10 years? It involves time. It involves listening. It involves trying to understand who each of my children is now, not necessarily the image I have of them from their younger days.
This brings me to my goal for my children: I will give them regular focused time, attention, listening, and conversation beyond meeting their basic needs. By doing this, I can hopefully be there for them at every step along their path to adulthood and understand how they are doing and growing as people.
What exactly do I need to do to be a hiker over the next 10 years? I absolutely love hiking and trail walking. There are few things more enjoyable to me than exploring trails of varying difficulty and finding unique and beautiful vistas. The problem, as always, is carving out time to do it.
So, what kind of goal can I set? I will walk at least one significant trail or go on at least one significant off-trail hike per week, on average, for the next 10 years. By “significant,” I simply mean a trail that’s new to me that is longer than a mile. This is actually a fairly specific goal, which will make the next part of this exercise (tomorrow’s part) easy.
What exactly do I need to do to get myself in better physical shape over the next 10 years? This actually lines up well with hiking, but it needs to go beyond that. I want a fitness routine I can follow easily that produces the kind of results I want.
So, here’s my goal: I want to average 10,000 steps a day, triple my “pounds overhead in 10 minutes,” and move up 20 rungs on the fitness ladder in the next 10 years. These are the fitness tools I’ve found the most success with over the last several years, so I’m going to stick with them and push them as hard as I can. Again, as with the previous goal, this one’s pretty specific, which is a good thing.
If I do this same exercise with every single item on my list, I’ll have a clear list of the ways in which I’ll spend the hours of my life that I’m not maintaining myself and that I’m not working to do these things or preserve them.
Let’s do one more. What exactly do I need to do to dive deeply into tabletop gaming over the next 10 years? This might seem like a strange one, but tabletop gaming is perhaps my most “fun” hobby. I get a great deal of enjoyment out of playing board and card and other tabletop games. So, how can I dig deeper into this hobby?
It’s simple: I want to play every game in my top 100 games list at least 10 times. That might seem straightforward, but I have a taste for some rather long games – multi-hour strategic affairs. Not only that, I remake my top 100 list every year, something I do purely for fun to reflect my changing tastes and kind of take stock of where I’m at with the hobby, so it will actually end up being more than 100 games. This goal is all about playing games I already love as opposed to acquiring new ones, so it’s both personally exciting and also takes the edge off of spending money and acquiring things.
Now, the tables turn to you. Take that list of “deep areas” in your life that you developed on Day 1 of this journey and reword each one of them into a 10-year goal. Each one can be as specific or as vague as you want, depending on your motivations.
Some people thrive on very specific and measurable goals so they can track their progress over time (me, for instance). Others thrive more on general direction, so less specific goals actually work better for them – some interpret this as and yet they still find great success.
Don’t be afraid to spend some time on this step. It’s sometimes harder than you expect it to be. However, finding even a little bit of overall direction in a significant area of your life can be incredibly empowering.
At this point, we’re left with a few additional pieces. First, how will you earn income in order to do these things? This means that it makes sense to set a long-term professional goal or two. My long term professional goal centers around providing strong personal finance and life advice on a highly consistent basis, for example.
Second, how will you maintain yourself? Similarly, this means you should set some kind of investment goal for yourself, as well as perhaps some goals related to minimizing spending. My goal is to simply contribute a certain percentage of my income to financial independence / early retirement.
Finally, how will you clear out the shallows? This is very tricky, and it deserves some careful consideration.
As I stated above, the “shallows” refers to the areas of your life that you devote a little bit of time and energy and money and other resources to, but not extensive time and energy. It’s a small part of your life, but it consumes an amount of money (and perhaps time) that’s above and beyond what it should be consuming.
As you rethink your life, your goal should be to leave the elements of your life that you’re not focusing on high and dry. You need to dial all of them down to the minimum.
So, now’s the time to go back through the billing statements and the time diary that you accumulated during the first step and ask yourself which things you spent money and time on are ones that you’re not “going deep” on.
Your broad goal should be to absolutely minimize the spending and the time devoted to each of those areas. This is probably going to be a fairly big goal, and it’s also going to take a lot of your time in the near future. However, as you move through it and come out the other side, you’ll find yourself in far better shape than before.
Why is “cleaning out the shallows” so important? The reason is that you’ve committed more than the minimum time and energy and money to these things in the past, and it can be a difficult transition to moving to minimal time and energy and money for those things.
Remember, this is all about general directions. You’re trying to give some overall shape to where your life is going to head in the future in terms of how you use your money, your time, and your energy. Rather than just having some sense of vague things that are important to you, you want a sense that you’re really digging into something.
One last thing, and this is a big one: what do you do if you start to realize that maybe you left out something important, or you overemphasized something less important to you? Don’t worry about it! It’s absolutely normal during this process to rethink things about your life and decide that some things are more important to you and other things are less important. In fact, if you don’t have those kinds of shifts, then you’re probably not thinking about what really matters to you, in which case you’re going to stay trapped in a cycle of never having enough time or money for the big things you care about and wondering why you’re always in debt and feel strangled for time.
Next time, we’re going to start talking about specifics for these goals. We’re going to break these bigger goals and directions down into actionable things that you can take on today. From there, we’ll start really digging into cleaning up the shallows, because that’s where a lot of the hard work really lies.