Two years ago, when I started on my financial journey I didn’t have all the details worked out. I had credit card debt, my retirement account was stagnant, I wanted to buy a home and I didn’t like my job and didn’t have enough for a down payment.
I needed to improve every area of my finances if I planned on having a solid financial future. To know me, is to know that I’m a planner. But I knew I couldn’t wait until I had one of my “perfect” plans to get started.
Where do you start when, you need to pay down debt, save for a down payment, prioritize retirement savings, build an emergency fund, invest, diversify, find a better bank and update your resume?
I started with debt first. My plan was to stop digging, so I put away all credit cards. Literally. I put them in a draw and didn’t touch them. I didn’t freeze them or cut them up because I was working on being disciplined. Having access to something and not indulging was building my financial discipline.
I immediately put myself on a cash/debit card diet. I noticed by month two that the minimum payments began to go down on the cards. This allowed me to apply more money to the card I wanted to pay off first. It was a small win, but it was progress.
I then moved onto my retirement account. Nothing was going into my retirement on a regular basis, so putting a small amount on automatic was also an easy win. The money going in automatically allowed me to see that maxing out this account for the year was now a real possibility. I decided it was time to put my emergency fund on automatic. And just like that, I was seeing results.
My plan was to take small, consistent steps. Most of us, myself included, would love to implement the plan that fixes everything almost instantly. Most things in life don’t work that way. With all my planning and personal deadlines, my best move by far was to start small and be patient enough to allow my small victories to start adding up.
“Rome wasn’t built in a day, but they were certainly laying bricks every hour.”~ James Clear
Wherever you are on your journey I want to encourage you to strive for small, daily wins, such as: bringing your lunch to work, lowering your credit card debt by $200 and raising your automatic savings by an additional $5 or $10. This is progress at its finest because its sustainable. Progress feeds motivation like nothing else.
However, most people want their progress all at once or they don’t want it all. I have friend with this mindset. He desperately wants to lose weight but he only wants to see his weight come off in the double digits. You see, he wasn’t happy or encouraged losing two pounds a week with his previous exercise program, which would have him down 24 pounds to date had he stuck with it. Instead, three months later and he is onto a new plan hoping for one big 10-pound loss.
Progress, like compound interest, starts off small and seems insignificant. But if you keep at it, both become exponential.
It is a fight to build wealth no matter where you are in the process. Everything around us conspires to take money out of our hands. But you must fight the good fight. Continue to save, invest and grow your net worth even when it seems impossible. Save your pennies (copper) until they become dollars (cotton).