At this time of year, after the holiday and before the end of the year, you may reflect back and look forward to the New Year fast approaching. I felt that this article, one of my most-read classics from three years ago, was perfect for today. Even if you have read it before, it may be worth another read. It may be helpful as you gather your own thoughts on your life.
“Enough is enough!” Have you ever said that to yourself?
You absolutely decided you were going to make a positive change in your life. Immediately and with conviction, you started taking action. Was it in a relationship? Chasing your dream? Managing your money?
That was the challenge for me recently: money management. I’d taken classes, read books, and managed to get myself out of my college loan and business failure debt on very little income. I read Secrets of the Millionaire Mind and The Richest Man in Babylon.
Then, somewhere along the line, I got lazy in my money management. I kept fooling myself by thinking, “When I start earning more, then I’ll start saving more. Then I’ll put more away for retirement.” LOL! What a fool I was. “Then” might be a decision, but it isn’t a commitment.
As an entrepreneur with fluctuating income, I’m never quite sure how I’ll end up until the end of the year. One concept that has helped me is tracking my net worth each month on a simple spreadsheet. The record makes it easy to see if you’re making progress or losing ground. Income doesn’t really matter. As I learned from Patricia Fripp: “It doesn’t matter how much you make, only how much you keep.” There are many people — at every income level — who are broke.
When I was looking at the results of my money management decisions, I realized that although I was paying my monthly mortgage, I wasn’t really making any progress on my net worth. When I moved to Las Vegas more than five years ago, I was carrying a business credit card debt averaging $40,000. I decided many times that I had to do something about that.
Well, if you have to make the same decision more than once, you aren’t really committed! I’d pay it down and then make some other risky money management decisions that would put me right back at that $40,000 balance. Ouch!
What I wasn’t doing was living beneath my means. It’s a common problem. In December of last year, I went back to the intensive training of Millionaire Mind and made some breakthroughs. And this time, I committed to making progress.
I decided to use creativity and accountability. I told close friends from my church about my commitment and asked for help. My pastor, Vince, noticed that I ate out a lot and routinely bought my favorite Dunkin’ Donuts coffee. He pointed out that making coffee at home costs 11¢ per cup.
Well, I wasn’t perfect, but I started making some better decisions and transferred some non-interest-bearing savings to an IRA. Just the act of acting, I believe, helped me gain momentum. Little things add up on both the positive and negative balance sheet. When you look at the compound effect, it can be scary.
I also started tuning in to the Suzy Orman show and listening to a Dave Ramsey interview where I gained a new insight. Dave mentioned that tithing (giving 10% back to God) is not enough. He said that he sees it as God’s allowing him a certain amount of money to handle, meaning that it’s all God’s money. Hmm . . . Interesting.
I thought of my favorite parable of the three talents, which makes the point that people who take care of things will be given more, while those who don’t care for what they have will see it taken away. What I surmised from this was, why should I get more if I can’t even handle what I have? I wasn’t living beneath my means, but more like exactly at my means, according to my spreadsheet. Yikes!
That motivated me. I asked God for help. I did daily affirmations. That helped me make better decisions. I took half of all my income and immediately put it towards that credit card debt. That momentum and watching the progress on my spreadsheet got me really excited. Last week, while speaking in India, I was able to transfer the final payment! My first milestone in my money management goal: business credit card — zero balance. Accomplished.
Sometimes it’s easy to look at others and think, “They’re making it.” They’re earning enough to quickly pay anything off. Judging others is easy, but all that matters is looking at the results of your decisions.
I heard about a conference recently where that had to cut off registrations because they couldn’t afford more attendees. When they did the numbers, they realized the cost of food and activities for each person was more than they were charging! To hold the conference, they had to get more sponsors. Sound crazy? From an outsider’s perspective, it is. In a way, that was exactly what I was doing. When I looked back at what I was paying in interest on that $40,000 over the past five and a half years, I realized that it cost me at least $42,541.60. Yikes! That’s a year’s salary to some people. That was my cost of deciding without committing.
“Then” doesn’t happen. Each decision in the “Now” matters. We all have challenges and know we have to do something. Small decisions can be built upon to gain momentum. All of your decisions become results, good or bad. Track your results. I’ll bet there’s an app to track anything. If you get a Starbucks coffee for $3.50 every day, that’s $1,277.50 for the year! Enjoy a cup of home-brewed coffee for 11 cents. That’ll cut your expenses down to $40.15 over a year.
The compound effect of small decisions adds up. I’m applying my momentum on my personal card now — my next milestone. What’s your next milestone? Want to get motivated? Just figure out what your non-commitment is costing you!
Share your thoughts below!