I thought I’d expand today on Ruth’s awesome post from Thursday. In it, Ruth talked about the expansive variety of advice that exists in personal finance blogs and how it can be overwhelming at times. This made me laugh, as we spent the first three years of our debt payoff journey relying too much on the advice of others and not nearly enough of getting to “know thyself” in terms of what techniques worked for us and what didn’t. Instead of making a plan that worked with our individual personalities, we made plans that forced us to mold ourselves into the personalities and plans of others.
This, obviously, didn’t work for very long. We’d try it and give up, soon finding ourselves looking for another way, and another way, and another way to manage our money.
Only when we started looking inward about what made us get into our money mess in the first place were we able to make a plan that worked for us. And I think that is the key to success. Here are some questions you can ask that will help you get to “know thyself” better and create a money plan that works for you.
What Are My Subconscious Views on Money?
For both Rick and I, we subconsciously viewed money as something just barely out of our grasp. In our minds, we couldn’t reach it and didn’t deserve it. Those mindsets affected how we spent and how we managed our money. We also were both ingrained in a struggling mindset when it came to money. We weren’t used to not struggling for money, so that made any glimmer of wealth uncomfortable for us. I talked here about being afraid to be debt free and how that mindset messed up our path to debt freedom.
If you’re willing to take the time to dig really deep and figure out what your subconscious views on money are, you can begin to re-train your mind to think differently, and your journey to debt freedom will likely accelerate as you do.
How Do I View Frugality
This is important. There is a major league difference between frugal and cheap, but if you don’t realize that, you could be subconsciously sabotaging your efforts to build wealth because you associate managing your money well with being cheap. Understanding that frugal is different than cheap, and embracing a spending plan that minimizes waste will help you to build wealth/pay off debt faster.
How Much Does My Psyche Affect My Money Management?
The answer to this question will help you to determine whether the debt snowball or the debt avalanche is better for you in terms of a debt payoff strategy. The debt snowball (payoff of debts in order from smallest to largest) is best for those who want the quicker wins, because the number of debts you have will drop off faster. The debt avalanche (paying off the debts with the highest interest rates first) will help you pay off debt faster in general, but you won’t necessarily see individual debts drop off very quickly. You need to find out what motivates your mind more: the quick wins of seeing individual debts drop off faster or the method that will save you the most money overall.
What is NOT Worth Giving Up to Me?
This one is a biggie. Some people have no problem at all giving up everything they own in order to be debt free quickly. Some people would rather keep their house, or their pets, or their car, or their extracurricular sports or whatever. You need to decide what you’re willing to give up and what you’re not willing to give up right off the bat. This can be a tough balance because you probably can’t say “I’m not giving up anything” and still get out of debt. Look at the list of your monthly expenditures line by line and decide what can go – and what has to stay.
For us, we chose not to give up our pets. To us, our pets are like family. We chose to keep them but we also chose to find ways to be as frugal as possible in caring for them without compromising their health or safety.
We did choose to give up eating out and entertainment costs, as well as vacations. We chose to continue to drive old cars and to not remodel our house or buy new furniture. To this day we have crappy living room furniture – and it drives me nuts. But I want financial freedom more than I want new couches. Decide what expenditure cuts are worth financial freedom to you – and what ones aren’t. Then, make the cuts.
If you can dig deep into your psyche and learn to know thyself before you make your debt freedom plan, I’d be willing to bet you’d have better success, not being swayed so much by the vastly differing opinions in the world of personal finance blogs.
What do you know about you and your money that influences your journey to building wealth?