Figuring Out the Path Forward

Most of the questions I get from readers about their finances have some things in common.

They’re at a crossroads of some kind. Whether it’s triggered by a major life change or not, they have a sense that their current direction in life isn’t perfect for where they think they want to be going.

They have some idea of where they want to go in the future, but it’s often cloudy and unspecific. There is a vague vision of “retirement” or “getting out of debt,” but they don’t really have any specifics about what that will mean.

The path between their current place and that destination is completely unclear. They know the specifics of where they’re at, but they don’t have any real idea how to move from where they are currently at to that vague goal of where they want to go.

There are some aspects of their life that are purely “wants” that they hold dear. So often, I’ll see lists of expenses from people that include some obvious unnecessary expenses (a $100 cable bill? a $120 cell phone bill? a $100 a month gym membership? a $80 internet service bill? $400 per person in food each month?) but the person genuinely believes that they’ve cut things to the bone already. They’re not interested in or willing to let go of certain things or to make certain changes in their life – usually, they consider the idea laughable.

This uncertainty is causing them stress. They don’t like their current direction, but the path forward to a better place seems very unclear.

These principles can show up in all kinds of questions, from the person panicking about their overwhelming mountain of debt to the person seeking a way forward after receiving a big windfall, from the newly unemployed to the newly employed, and almost any other scenario you can think of.

Again, no matter what the problem is, my response tends to include several steps. These steps are the key to finding your path forward, no matter what your financial problem might be.

Figure Out the Stakeholders

In other words, who are the people who are impacted by your current situation?

What people are impacted by your financial decisions? A good place to look for these is in the people who live with you and the people you claim as dependents on your taxes. For all of those people, your financial standing has at least some impact. There may be others, too, such as aging parents and business partners.

Most of the time, figuring out stakeholders is pretty self-evident, but it’s important. Why? When you move on to defining goals, you can’t disregard stakeholders. If there are people relying on you, you have to think about those people as you define goals.

Not too long ago, I had a reader write to me about his desire to launch a small business – a comic book shop. The person acknowledged that even the optimistic business models pointed toward a significant drop in income, but it would make him happy.

My response? What about the people who have a stake in your income? Do you have children? Do you have a spouse who is going to be facing a greater financial burden?

Another great example of the importance of stakeholders comes from my own past. In 2003 and 2004, when I was really racking up the debt, I was really my only stakeholder. Sarah was a stakeholder, but she was pretty secondary from a financial standpoint.

By the time 2006 rolled around, I had another stakeholder – our infant son. Ensuring his security meant that he had a major stake in my financial choices. Sarah also rose in importance as well because, frankly, having a child cemented our life together and her financial well-being directly impacted our son’s well-being. This realization basically triggered our family’s financial turnaround.

Want another example, one that doesn’t involve children? A friend of mine is married to another person who is suffering from multiple sclerosis. For now, the MS sufferer can work, but it is hard to tell how long that will last. The MS sufferer is a major, major stakeholder in the financial decisions of her partner.

Define the Goal as Clearly as Possible

Now that you’ve considered the people who are impacted by whatever you choose, you need to start fleshing out what your big goal looks like.

You’re standing at a crossroads. You have a vague idea of where you want to go. You know the people you’re going to be carrying on that journey. The next step is figuring out exactly where your destination is.


A Big Goal Brings Excitement

When you think about a big goal, it can really lift you up and add excitement to your life. You have something big to think about when you’re daydreaming, and when you realize that you’re actually moving toward that daydream and it’s not just a dream, it feels good. Really good. If that goal is a true goal – and we’ll dig into that in a bit – it will make you feel amazing.

The periods in my life when I was really committed to a big goal were among the most exciting and enjoyable parts of my life. I always had something big to think about, which always injected some real excitement.

A Big Goal Brings a Roadmap for Lasting Personal Change

When you start really focusing on a big goal, you begin to really notice the parts of your life that don’t mesh well with your big goal. You’ll want to fix them, because you’ll see – more than ever before – how those things are holding you back.

You’ll want to use your free time differently. You’ll want to de-commit from things that are just holding you back. You’ll want to make all kinds of changes in your life and they’re almost always changes for the better. It’s like a spring cleaning for your life.

A Big Goal Improves Your Ability to Maximize the Moment

During that first burst of working toward a goal, you won’t want to waste a second. You’ll really want to push hard and you’ll start thinking a lot about how to maximize the present moment.

It’s that “maximizing the present moment” mindset that is really valuable. Once you get used to doing that, it really changes your life. It causes you to spend money in a smarter way. It causes you to spend your time in a smarter way.

The best way I’ve found to build it is to chase a big, giant goal. The sheer excitement of the chase – especially at the start – strongly encourages that kind of “maximizing the present moment” mindset, and that’s something that lasts and will change your life.

A Big Goal Sets the Stage for Better Habits

Another big element of starting a big goal is that you’ll want to adopt some better habits for living. For example, you might choose to automate retirement savings, or you might start going to bed an hour earlier so you can get up an hour earlier, or you might start taking a walk every single day to clear your mind.

As the big goal cools off or you eventually start seeking a new big goal, you’ll find that at least some of those better habits will persist.

I’ll give you three examples of this from my own life.

In 2006, when I set a big goal of launching The Simple Dollar and making it successful, I essentially made a new habit of spending my evenings writing and working on personal projects instead of watching television. Even after the site became my full time job, I kept using the evenings for personal projects. I still barely watch television and it just gives me a flood of time to use for things.

I’ve tried to improve my physical fitness a few times, but the one habit that has persisted is a daily walk of at least one mile (and usually more). On that walk, I usually clear my mind and get myself into a much better mental state for work. I am more productive in a two hour period if I spend the first twenty minutes on a walk than if I just dive right into the project.

During our big financial turnaround, particularly in the first few years, we made it a habit to try lots of new free things. Today, we don’t even really need that habit – most of our hobbies are either free or very low cost.

Good habits stick around at least some of the time. Big goals encourage you to try lots of better habits. It’s a win-win.

Defining the Goal

First, start with what’s wrong. You’re not at a crossroads unless there is something wrong with the direction in your life. You’re headed in a direction you don’t like. Why? What’s not going right?

Next, ask “why” at least five times. I can’t pay my bills. Why? They add up to more than I’m bringing in. Why? I’m signed up for a lot of services and I spend my free time using those services. Why? I am burnt out at work and want something to take the edge off. Why? My job makes me really unhappy. Why? My boss is unrealistic and won’t give me the hours I need.

You might have to do this a few times, but you’ll eventually find that the “whys” lead you to the core of the problem – and it’s often not what you think it is. In that example, the person can’t pay their bills, but it turns out that the core reason is job unhappiness. Thus, the person’s big goal should be to fix that job unhappiness.

Then, turn the result of that final “why” into something you can work towards. The person in the example above should have the goal of “finding a fulfilling career path.” What happens when you set a goal that actually addresses the core problem is that it feels right. You just know it throughout you.

Once you have that central goal, think about the steps to get there. Start making a big long checklist of things you need to do to make that goal happen. For example, a person seeking a career change will probably need to start taking classes. If you’re taking classes, you won’t have free time for things like World of Warcraft or cable television, so you can cut those services. You may also want to just switch jobs in the interim to get away from your horrible boss, so another step is to interview for other jobs in your spare time, perhaps one that can flex around taking classes.

Make sure that your steps are as transferable as possible. You may find that in six months, the realities of your life are pointing you to a different goal. Make sure that the steps you take, particularly at first, are steps that will be helpful for lots of other goals. For example, cutting unnecessary expenses is always a good idea. Getting a less-stressful job is always good, too. Getting more involved in the community is almost always a winner.

For each thing you’ve got on your checklist, ask yourself if doing this will still be helpful if you’re pushing toward a different goal in the future. If it is, focus on that step first.

Finally, make sure that your big goals rely on the actions of others as little as possible. This is vital. If your goal requires a lot of extra effort from other people without them getting a lot of value in return, your goal is going to fail. You can’t expect your spouse to change his/her life because of something that you want. At the same time, you can’t make choices that remove foundations of the lives of others if they don’t have a way to replace them. You can’t just choose to quit your job if you don’t have a backup when you have a child at home.

Set Some Milestones

Even with a clearly defined big goal, it can still be very hard to see the path forward from here. You can clearly see the mountain you’re journeying toward, but the valley between here and there is shrouded in mist.

For me, the key to success with any big goal is to break it down into smaller and smaller pieces until it’s manageable. This takes some thinking and some list-making.

What I usually do when I have a new big goal in mind is start making lists of every step I can think of that I’ll need to take to get between here and there. The steps can be big or they can be small (but if you have a big step, you may want to break it down into smaller pieces). They can be out of order, too – you can order them later.

My goal with this is to come up with steps that I can complete in a month or two. Then, from those steps, I ask myself what can I do this week to move forward in a big way toward that goal?

That is my focus for this week. For example, I might decide to devote this week to doing everything I can to trim our energy bill by 20%, or I might devote it to trimming 20% from our other monthly bills (cutting rarely-used services, switching to lower-cost providers, etc.). I might decide that I need to complete an outline for a novel I’m working on or sketch out the main characters, the side characters, and the plot with more detail.

Often, I’ll start the week by breaking that down into daily bits. “I need to exercise for thirty minutes and eat smaller lunches each day this week,” for example, or “I need to find out what work needs to be done for this professional certification today,” or “I need to spend 30 minutes looking for ways to cut energy use in my house today.”

Knock Down Some Routines

Another big element in moving forward from where you’re at right now is to simply disrupt some of your routines. Look at the routines of your day and identify some ways to alter it that will free up time and money, then try them on for size.

For example, if you have an evening routine of a few hours of television, cut it to an hour, spend an hour working on a personal project, then go to bed an hour earlier, making it easier to wake up refreshed in the morning (or to wake up an hour earlier if you’re more productive in the morning like I am). This will (probably) save money in the form of less energy use and free up some time, too.

If you go to the coffee shop each morning, make it a routine to hang out instead by the coffee pot at work – or get a tiny coffee pot for your desk. This will save money.

If you eat fast food each day, stock your desk with some instant soup mixes, a bowl, and a spoon, and prepare lunch at work each day. This will save money.

Study your commute and see if there isn’t a better way for you to get home that can shave five or ten minutes off of the drive. This will save you time and money (on fuel) and might help you resist some temptations from the commute, too.

Try shifting the time of day in which you do your household chores. Try making meals in the slow cooker – do it every day for a week. Try eating a protein-filled breakfast (try egg whites) so you’re not ravenous at lunch.

Just try on some new routines. Commit to each routine change for a month, to give it a fair shake. Make a sincere effort to stick to the new routine.

Launch a Daily Practice

One great new routine to launch is something that I’ve been doing for a while that is called the “daily practice,” a name that James Altucher gave to a very similar idea he’s shared in his books.

Basically, you free up a chunk of time each day – say, one to two hours – to focus on a set of new habits that will improve your life in some way.

For example, I usually try to devote two hours a day to my “daily practice.” I spend about half an hour reading something challenging, about 45 minutes trying to write fiction, about twenty minutes exercising, and the other thirty five minutes split between taking an online class or studying another topic I’m interested in.

Fill up those two hours (or whatever time you can block off each day) with progress on things you care about. They can be hobbies. They can be self-improvement. They can be active frugality (things like making meals in advance or making homemade laundry soap).

The key thing here is to make sure that at least some of those pieces of your daily routine push you toward whatever your big goal is. If it’s financial (and I’m assuming that it is), you should spend some of your time trying to cut costs or trying to launch a side business or trying to learn something new you can apply to the workplace.

The point is to devote some time each day to things that are personally important to you that you want to improve in your life and the goals you want to achieve. As with the new routines, you should try to stick with individual elements of your daily practice for at least a month to see if they click with you.

The End Result

If you take all of these methods into account, what you’ll find is that suddenly you have a path forward from where you are at to where you want to be. Simply seeing that path – and knowing how to follow it – is often enough to change everything. It takes you from feeling hopeless and directionless to powerful and directed. It can make something that seems nebulous and impossible seem real and quite possible. And, even if you don’t achieve that final goal, your life will have been made better through the attempt.

Today, you’re at a crossroads. Sit down, figure out the goal, identify the path forward, and start making changes. Tomorrow, you’ll be more than you were today.

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