The other night I was reading a book to my son. We were at the climax of the story and intensity was building as they crossed a rickety, old bridge. The words jumped off the page, “Go slow, fast.” Two kids (brother and sister) were climbing the Andes mountains and encountered a couple of different obstacles. The first was mountain sickness. They were at such a high altitude that their bodies weren’t adjusting quickly. They needed to go slowly in order for their breath/brain to catch up. They were experiencing lightheadedness, dizziness and hallucinations.
The second obstacle they encountered was snakes. The young boy did research on snakes in the guidebook he carried with him and determined which ones were poisonous and which ones were not. In this particular instance, they came across the deadly snakes (green and black stripes). His words to his sister were, “go slow, fast” You see, he knew the imminent danger that they were in. However, they both knew that they couldn’t sprint to evade the situation. They needed to go slowly (to allow their bodies to adapt to the higher altitude), but fast (to escape the venomous snakes).
We can look at our finances the same way. We are going to encounter obstacles on our debt free journeys. It is important for our minds to adapt to the new normal of not eating out, pausing retirement, and saying no to vacations (temporarily). It takes 90 days to form a habit, good or bad. Even budgeting takes a good 3 months to get into a solid rhythm. Each month, you can track your progress, no matter how slow you are going. Adapt to the obstacles that are thrown at you, such as: spending with a credit card when you don’t have the money.
The other aspect is speed. You want to pay off the debt as quickly as you can so you can start saving and investing money to truly build wealth. By using the Snowball Method, you start with the smallest debt (regardless of interest) and throw everything you can at that debt until it is paid. Meanwhile, you are still making the minimum payments on the other debts you have in order to stay current. Then, when you finish the first debt, you move what you were paying to the next debt and tackle that amount. Repeat the steps until you have everything paid off.
You want to set goals that are realistic, but you also want to challenge yourself to accomplish the goals sooner than you anticipated. Let’s say you make $70,000 a year and don’t have a modest lifestyle, but you have $90,000 in debt. You should be able to pay that off in 3 years ($30k per year) on a very tight budget. If you get a raise, that’s even better because then you can accelerate your debt payoff and not increase your lifestyle.
The moral of the story is to go at a slow enough pace that you are comfortable with, but do it quickly so it doesn’t creep back up on you. If the kids earlier in the story gone slowly the whole way, they may not have made it across the bridge due to the snakes!
Stop having your money tell you what to do with it; instead, you tell your money where to go. Remember: you can wander into debt, but you cannot wander out. It takes disciplined, focused intentionality to get out of the mess you created.
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Madsen Financial Coaching 