One beautiful spring afternoon in 2006, I realized for the first time that not only did we not have enough money to pay our bills, but that our family was headed in a decidedly negative financial direction. We were accumulating debt. Our net worth was heading down, even though we were both earning a strong salary.
My first responses to this crisis mostly revolved around patching up the immediate situation. I read a bunch of personal finance books (of which this one had the most impact). I sold off large portions of our media collection, including some vintage baseball cards and other collectibles. I pushed myself to achieve some short-term savings, such as avoiding spending money for a weekend or for a whole week.
Those tactics helped fix the immediate problems. We didn’t miss any bills. We managed to pay off one of the credit cards extremely quickly. We got our heads somewhat back above water.
Unfortunately, we didn’t really solve the problem at all. Sure, we made things better in the short term, but over the long term the elements that got us into that bad situation were still in place.
We still had poor routines and habits. We still didn’t have shared goals that we were committed to. We still didn’t have the first clue about managing finances by budgeting.
We had relieved the immediate symptoms, but the disease was still unchecked.
Without applying a completely different set of changes to our life, we were never going to truly escape the problem. The symptoms would eventually return whether we liked it or not.
When you’re stuck in a financial pickle, it’s obviously important to figure out what will help you get out of that pickle for the moment with minimal repercussion. A long-term solution doesn’t fit a short-term problem, after all.
The real solution comes later. When you’ve fixed that short-term problem, you need a long-term solution to make sure that the short-term problem never happens again.
Having a yard sale? It’s a short-term solution that helps you pay your bills this month. Drafting a budget and sticking to it? That’s a long-term solution that helps you pay your bills every month.
Giving up all treats for a month? That’s a short-term solution that will put more money in your checking account immediately. Re-evaluating your treats and permanently dropping the ones that aren’t essential? That’s a long-term solution that will make sure more money stays in your checking account every month.
The key thing to always remember is that it takes a long series of small mistakes to put you in a real financial jam, and it’s going to take a long series of fixes to permanently remove yourself from that jam. One big act might make the immediate sting go away, but it won’t permanently fix the problem.
While relieving the symptoms is nice, the goal should always be to cure the disease.