Making A Break With The Past – Changing Habits And Thinking Long Term About Personal Finances

I enjoy “running the numbers” –

What will happen if I save “x” dollars for “y” years?

What will my balance be if the rate goes from “q” to “r”?

Can I retire in “z” years?

I’m fascinated by the mathematics of personal finance – but I am also keenly aware of the emotions behind our purchasing, borrowing, and spending habits. Bad habits are hard to break and good habits are difficult to establish – It’s hard to start living on a budget, it’s hard to focus on debt reduction, it’s hard to care about insurance, dividends, and investing.  For years, I struggled to properly manage my finances.

I’ve struggled to figure out “why” I used to be such a poor money manager, and I think I’ve come up with a few answers.

1.  I really didn’t have anyone to talk to about personal finance issues.

2.  I felt like the “magic day” would come and I’d “make enough” and I wouldn’t have “worry about” money.  (Sound familiar?)

3.  I was so busy with life (getting married, have kids, working hard) that I never took the time to think “long term”.

4.  I was lazy.

Combining all of these things, I had to make a “break” from the ways of my past.  Now, before you get the wrong impression, let me clear up a few things.  I have never bounced a check, I’ve never missed a payment, I’ve always worked hard, I’ve always had a good credit score, and my family has never gone hungry.

I’m not really talking about “failing” as a financial manager – I’m talking about “being average”.  I was the prototypical “paycheck-to-paycheck” guy.  I made a good living, my wife worked, and my kids had plenty of toys, food, and clothing.  The problem was – I WAS STANDING STILL.  I wasn’t really moving backwards or forwards.  I was, as they say, treading water.

Three years ago, I decided to change my life and the way that I manage my finances.

1.  I started to use a monthly budget.

2.  I started to talk to my wife (and eventually my kids) about money and it’s role in our future.

3.  I stared the blog that you are reading right now – so that I would have a place where I could openly and freely talk about this important topic.

4.  I promised myself that I would get out of debt and that I would never borrow money again.

5.  I started to open up to friends and family members – and I committed myself to “being different”.

6.  I stopped waiting for “good things to happen to me” and I purposed in my soul to “make good things happen for my family and for those around me”.

7.  I organized my financial documents and I established “how much money/debt/savings” I really had.

8.  I committed myself, fully – emotionally, psychologically, and spiritually – to being the best money manager that I could be.

9.  I learned to admit, to myself, that I knew very, very, very little about “one of the most important aspects of life” – personal finance management.

The takeaway?  Getting started can be difficult – but I can PROMISE you – it’s worth it!  Analyze the things that you are doing (or not doing) and make the decision to CHANGE.

(One more quick thing  – Stop COMPARING yourself to other people.  We all have variables – kids, illness, income level, where we live, where we work – that affect how much we can save, how quickly we can pay off debt, and how much we can contribute to our retirement plans.  The key is – DO THE VERY BEST WITH WHAT YOU HAVE!  The chairman of Coke doesn’t manage Pepsi.  He manages Coke.  You don’t manage your neighbor – you manage you.)

23 thoughts on “Making A Break With The Past – Changing Habits And Thinking Long Term About Personal Finances

  1. Thanks for the reminder of why I started blogging a few short months ago. It’s a long row to hoe, but the wife is on board and we are starting to take real steps to try and manage our money rather than just keep enough to pay the bills.

  2. As Curtis says, thanks. That’s why I started blogging as well. I needed to be involved with like-minded people, I needed to be thinking about it and engaged so that I’d actually do stuff. It’s not perfect, but I’m trying a lot more.

  3. I believe people will always compare themselves to others. The key is to put in context who your comparisons are with. I like to look at those who are older, see where they were at my age, and learn from their triumphs and mistakes. I have managed to get out of debt faster than anyone in my family doing this and my two older siblings are a big part of the reason. I try to give them credit for my learning curve whenever I can because I got to watch their lives and talk to them about how to do things right.

  4. Great post, thank you very much for sharing.

    I had a “break with the past” experience about seven years ago. Unfortunately, I had some problems with depression three to four years ago and slipped back in a lot of ways. I have made some good decisions since then, but I have lost track of a lot of the details and slipped back pretty far. Reading this and a few other PF blogs lately has really encouraged me to regain control of my finances, and I think I’m almost ready to make the break again.

    I am definitely adding this post to my finance planning notebook!

  5. I applaud your efforts in becoming debt free and sharing your story to try and help others. I am a little puzzled at why you are only buying term insurance? Sure get something in place for protection, but if you have the money put in cash value permanent life insurance (whole life). It provides you with protection while having access to the cash value to borrow tax free. If you look closely, it closely resembles the benefits of a Roth IRA. Continue to be more aggressive with your 403b and others, but build some safe tax free income with your permanent life insurance. I hope your local insurance agent at least covered these ideas with you. Price is not always the most important factor in life insurance, look at the benefits and make sure there are not exclusions. I am sure your children could benefit from a whole life policy as well, not because you plan on them dying but to give them insurability and a financial head start.

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  7. This post is great! I’m currently in the situation of not really having anyone to talk to about finances and starting to blog so I can communicate with like-minded people.

    I think your #4 reason on why I’m a poor money manager is laziness. And I think that’s it with a lot of people! I need to build the habit of creating a budget and looking at investment options instead of watching excess TV or excess internet surfing.

    I love your site and I look forward to more of your future postings!

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