Savings and Investing Series: Part I - Getting in the Mindset!
Traditionally the topic of personal finance is one that is often shied away from in household discussions as it is often accompanied with feelings of uncertainty and unease. Considering that 80% of Americans are in some form of debt it is safe to assume that the majority of us are not exactly comfortable with this topic. In many instances, it is the seed that sparks hostility and conflict within oneself and relationships alike, so much so in fact that financial disagreements and financial infidelity are the number one catalyst for divorce.
In the Marine Corps, one of my favorite Leadership Principles is “Know yourself and seek self-improvement.” Like many things in life, we not only fear what we don’t truly understand but we also shy away from those areas in which we are not comfortable or familiar with. Instead we tend to seek the path of less friction and focus on those areas in which we are most comfortable with. If this sounds like you, you’re not alone, it’s part of our psyche.
We as a species don’t exactly avoid confrontation, rather the way it makes us feel, and the perceived image of how others will view us. We care about what others think more than you realize. This is made apparent by the funny, yet statistically accurate joke made by comedian Jerry Seinfeld, who stated that “According to most studies, people's number one fear is public speaking. Number two is death. Death is number two. Does that sound right? This means to the average person, if you go to a funeral, you're better off in the casket than doing the eulogy!” If this sounds like you, I propose we begin to look at things slightly differently.
One of my favorite quotes from the late Steve Jobs speaks to the topic of putting things into perspective. “When you grow up you tend to get told that the world is the way it is and your life is just to live your life inside the world. Try not to bash into the walls too much. Try to have a nice family life, have fun, save a little money. That's a very limited life. Life can be much broader once you discover one simple fact: Everything around you that you call life was made up by people that were no smarter than you. And you can change it, you can influence it… Once you learn that, you'll never be the same again”
If you’re not seeing the connection between what we are discussing and personal success just yet, please stick with me a bit longer!
There are two things that often prevent us from putting ourselves out there to try something new, both of which tie together. The first is the fear of failure; more specifically, how others will view us after said failure. The second is our greatest delusion in which, due to our biological construct, we are programed with the delusion, the thought, that we are in any way eternal. In doing so, we are brought into a condition of inaction. Similarly, to a project with a due date far in the future, we procrastinate with the belief that there is always tomorrow. This belief shapes us to live in more fear, as the sense that we are eternal leads us to believe that our failures will stick with us forever. Once you understand this, and understand that the majority of others are just like you, you will be able to operate unrestricted by the fear of embarrassment and failure.
Lastly, we need to talk about goals. In all the successful people I have interviewed over the years, Ambassadors, Generals, CEOs, one commonality between them all was their ability to set specific goals. The average person who sets a goal often fails not because they are not good enough, rather their goals were not specific enough. When you set a New Year’s resolution that you want to lose weight in this upcoming year you are 100% setting yourself up for failure. Why? Because this goal is simply too vague. Now if that same person were to say “I will lose 15lbs over the course of four months,” they are more postured for success.
Regarding goals, the average person does not plan further ahead than their next outing on Friday night. This means that their longest-term goal is one week in the future. I have found, with great success, we need to have specific goals in three aspects of our lives, each spread over three different timeframes:
Personal Goals
Short-Term (1-3 years)
Mid-Term (3-5 years)
Long-Term (5+ years)
Financial Goals
Short-Term (1-3 years)
Mid-Term (3-5 years)
Long-Term (5+ years)
Professional Goals
Short-Term (1-3 years)
Mid-Term (3-5 years)
Long-Term (5+ years)
In doing so you will begin to see rather amazing things begin to happen. At first you will set short-term goals that you know you can accomplish, mid-term goals that you are fairly sure you can accomplish, and long-term goals that you kind of think are possibilities. As you begin to tackle these goals with intense focus you will find that most of your short-term goals were actually quick and easy on the spot fixes, your original mid-term goals now slid into the short-term, and what you once believed were distant possibilities are now very possible mid-term goals. This leaves your new long-term goals open to significantly larger goals than you initially thought possible!
Look at these two examples below to see how the goals Nelli and I set back in 2013 evolved. These original goals were really just wishes. Once we realized the importance of setting quantitative, specific goals, we were able to create these evolved goals just a few weeks later.
Original Financial Goals
Short-Term (1-3 years)
Figure out what we are doing wrong
Begin paying off debt
Mid-Term (3-5 years)
Continue to pay off debt
Save for having a baby
Long Term (5+ years)
Continue to pay off debt
Begin investing for retirement
Evolved Financial Goals
Short-Term (1-3 years)
Become debt free within 1 year
Create emergency savings equal to 6 months of our living expenses by December
Begin investing 15% of income towards retirement by December
Begin saving for kids college by January of next year
Mid-Term (3-5 years)
Save (specified amount) for a cash vehicle purchase by our next PCS
Long Term (5+ years)
Continue to invest (specified amount) to enable a mortgage-less house payment by retirement from active duty service
Continue to invest (specified amount) to enable our children to go to college debt free
Build our retirement nest egg to (specified amount) by age 65
So what happened? Once Nelli and I truly began to focus and work on these original goals, we found that in less than one year we had accomplished all of our short, mid, and even some of our long-term goals. This enabled us to sit back down and create more properly established goals at scopes that we had once never even realized were possible.
Early on, when we were in all of that debt, the idea of purchasing a house with cash was not just a long-term idea, it wasn’t even a possibility. Click here to read our story titled Being Normal: Buying Things we Didn't Need, With Money we Didn't Have, to Impress People we Didn't Even Care About! Once we established financial peace through Dave Ramsey’s teachings, click here for my article on Dave Ramsey’s plan, a weight had been lifted and the curtains revealed a whole new world of possibilities.
The take away from all of this is that we all have a finite amount of time to live our lives and we needn’t waste any of it living in fear of potential failure. All of us are more alike than we realize and many of us can benefit from the notion of tackling those areas we are least comfortable with, with a head on approach. Without establishing this foundation we cannot successfully move on to our next topic.
We hope you enjoyed Part I of this Savings and Investing Made Easy series.
