31 Days to Financial Independence (31/31) – Bringing It All Together

“31 Days to Financial Independence” is an ongoing series that appeared every Thursday on The Simple Dollar for the better part of a year. This is the final entry in the series.

Before we get started with this final edition of the “31 Days to Financial Independence,” let’s make a giant list of all of the entries in one place. If you want to bookmark the series for future reference, this would be the article to save!

Getting Started
The series began by putting financial change in the context of your broader life and goals. Many people spread themselves too thin with too many desires and goals and end up missing out on many things that they really value because they’ve spent their time and resources on things of lower importance to them. It’s time to “go deep” on the things that really matter and absolutely minimize the other areas.
Day 1: The Shallows and the Deep
Day 2: Finding Direction in the Deep End and Cleaning Up the Shallows
Day 3: Finding Daily Direction and Meaning
Day 4: Figuring Out Your True Hourly Wage – and What It Means
Day 5: A Living Budget
Day 6: The Big Boost

Trimming and Cutting Your Spending
The next segment of the series focused on smart ways to cut back on spending throughout your life. The goal isn’t to cut everything, but to cut back on the parts of your life you recognized as having relatively low importance.
Day 7: Cutting and Minimizing Debt
Day 8: Trimming Your Spending – Housing
Day 9: Trimming Your Spending – Transportation
Day 10: Trimming Your Spending – Utilities
Day 11: Trimming Your Spending – Food
Day 12: Trimming Your Spending – Insurance
Day 13: Trimming Your Spending – Health Care
Day 14: Trimming Your Spending – Entertainment
Day 15: Trimming Your Spending – Apparel and Services
Day 16: Trimming Your Spending – Education and Miscellany
Day 17: Integrating Cost-Cutting Measures Into Your Life

Improving Your Income
Making more money goes hand in hand with cost-cutting on the path to financial success. Together, they can push you to unbelievable heights. This section of “31 Days to Financial Independence” will guide you toward bringing home more money in a variety of different ways.
Day 18: Improving Your Income at Your Current Job
Day 19: Getting Promoted at Your Current Job
Day 20: Finding a Better Job
Day 21: Starting a Side Business

Investing for the Future
Once you’re spending substantially less than you earn, the question then becomes: what exactly should you do with that extra money? Investing for the future is one key part of a stable and strong financial life.
Day 22: Using the Gap and Avoiding Lifestyle Inflation
Day 23: Investing for Retirement
Day 24: Investing and Saving for Education
Day 25: Investing and Saving for Other Goals

Special Topics
The series winds down with a number of standalone sections on specific topics of importance to anyone on the path to financial independence.
Day 26: Considering Insurance
Day 27: Handling a Crisis
Day 28: Handling the Long Valley
Day 29: Handling Changing Goals
Day 30: Getting Your Friends and Family on the Same Page

And here we are.

The road to financial independence is much like a jigsaw puzzle. It’s made up of a lot of little pieces, some of which are obvious in terms of what they are and how they fit, like a brightly colored edge piece, and some of which are vague and unclear at first, like an ordinary piece in the middle somewhere with a vague pattern.

However, for most people, it’s like getting a 500 piece jigsaw puzzle with 750 pieces in the box. Most personal finance advice you’ll find out there includes a lot of stuff that is relevant to your life mixed in with a lot of stuff that isn’t relevant, so part of the challenge is to discard those irrelevant pieces as you go. That’s the “personal” part of personal finance – figuring out which advice really applies to you.

How do you do that? I’m going to close out this series with the one tool that has brought everything in personal finance together for me and together for so many others. It’s a piece that many personal finance books completely overlook, but I consider it incredibly vital.

It’s regular reflection.

Exercise #31 – Reflecting on Your Journey and Bringing it All Together

The path to your financial destination is not a simple and straight one. Along the way, you’ll find yourself getting lost and circling back. You’ll find yourself wandering off down side paths and then wondering where you’ve gone. You’ll find yourself stopping for a while and wondering why you’re going. You’ll find yourself backtracking sometimes, or walking very slowly into a strong headwind.

It’s not an easy, smooth path, because life isn’t easy and smooth. Things change. People change. The great plan you came up with five years ago might not mesh with you right now. The circumstances of your life will almost assuredly change during that time. In a five year period in my own life, for example, I got married, switched jobs, had a child, bought a house, had a second child, and switched careers entirely, and my entire social circle completely rebooted along the way. My personal, professional, romantic, spiritual, and social lives were almost completely different at the end of that five year period as compared to the start.

It is completely unrealistic to think that the financial plans and goals that you had even a few years ago are still perfectly relevant today. That’s not how life works.

To compare this to the jigsaw puzzle analogy above, imagine that you’re assembling a 500 piece puzzle with 750 pieces in the box, except slowly over time the picture you’re trying to make changes, requiring you to be using different pieces. If you just keep moving toward the old picture, you’re going to find yourself unhappy at the end of the process.

What can you do, then? The first step is to recognize that a good personal finance plan is constantly being revised. You’re changing, your situation is changing, and the boundaries and specifics of your life are changing, so it’s natural that your personal finance plans and goals should change as well because good personal finance is a reflection of your life. What you’ve built in this series should never be set in stone.

Instead, you should begin a habit of regularly reflecting on your financial situation – your spending choices, your savings goals, and your priorities.

This shouldn’t be a “once per year money retreat” kind of thing. Instead, you’re far better off if the reflection is frequent but less intense. You should take advantage of the little windows in your life to really reflect on individual aspects of what you’re doing, as well as the big picture.

When you’re driving your kids to a soccer game, spend some time thinking through some of your recent spending choices. Were those choices really a good idea in the big scheme of things? What could you have done differently?

When you’re waiting at the doctor’s office, consider whether or not you’re putting yourself in a position to make more money at work. What could you be doing to put yourself in line for a raise? Or a promotion? Do you even want a promotion? Might there be opportunities elsewhere?

Personally, I find a great deal of value in putting aside ten or fifteen minutes each day just to think about my life as a whole and where it’s headed. I usually do this in the form of journaling – literally writing out the details of a concern I have in my life and then digging into that concern to find a good solution. Whether you actually write out those concerns or not is up to you (I find it powerful, but not everyone does), but the time put aside for really considering the details of one’s life is powerful for almost everyone.

During that time, consider different aspects of your financial, professional, personal, and spiritual life. Ask yourself really hard questions and think about the answers. If you’re unhappy with something, think about why you’re unhappy and what you could be doing better.

Many, many people go through their lives operating on instinct in terms of their day-to-day choices, and while instinct works pretty well for short-term impact, it’s pretty awful for building the life you want over the long term. Reflection is simply time where you consider the long term and perhaps retrain your instincts a little bit to incorporate more of the long term into your immediate decision-making instincts.

A concrete example might illustrate what I mean. In the last few months, I’ve spent a lot of time thinking about the coffee that Sarah and I enjoy in the mornings. Sarah is a heavier coffee drinker than I am – I just like a cup or two, while she’ll drink most of a pot in the morning. I’m also a more recent convert to drinking coffee than she is. While Sarah leaves for work in the morning, I stay at home and there’s often more coffee in the pot than I want to drink, and Sarah really doesn’t like stale hot coffee from the day before.

So, given that change, I’ve been thinking about how we can both get cups of coffee that we enjoy while keeping the cost low, and the solution I came up with was to try cold brew coffee. I essentially make it like iced tea in the fridge, putting some grounds in a large reusable tea bag in a large pitcher of water and letting it rest in the fridge for a full day. It makes a very mellow flavored but very potent coffee, one that Sarah and I both enjoy once we water it down a little bit (yes, it’s really potent). All she has to do is heat up some in her coffee mug in the morning and in her travel cup before she leaves, and then I can drink exactly what I want without wasting a drop. It’s also easier to clean up. It saves us money and takes less time each morning.

Sure, it seems like a simple thing, but it would not have occurred without some thinking about the problem and a better way of solving it to eliminate waste and unnecessary expense.

That’s a simple example about saving a dollar or so each day. For a bigger example, I’ll turn to our automobiles. For a long time, Sarah and I have been socking away money very steadily into our early retirement savings. I regularly ask myself if that’s the best choice without just assuming that it is, and recently I decided to tone it down a little bit.

Why? I’ve noticed that our cars are getting older. One of them was purchased eight years ago; the other was purchased seven years ago and was already several years old. They’re both approaching 200,000 miles and while they’re still in good shape, it’s fairly obvious that at some point in the next several years, they’re going to start wearing out and breaking down.

So, during one of those reflection periods, I realized that we’re probably cycling out both cars in the next three to four years, and because of that, it’s probably a good idea to make sure we have plenty saved up to replace them with reliable late model used cars. One will be a fuel-efficient and very reliable car for Sarah to commute with; the other will be big enough to transport our family on road trips with reliability and safety.

Thus, we made the financial choice to cut back on our retirement savings and instead channel a lot of that money into saving for replacement cars in about three years. We’re rapidly filling a savings account now and will continue to do so until we hit our car buying target number, at which point we’ll flip the switch back to early retirement savings.

I use reflection to constantly make little alterations to my spending habits, my personal choices, our savings strategies, and so on. All of those little alterations occur because I’ve noticed that something has changed in my life and I want to make sure my choices today reflect how things really are, not how things used to be several years ago.

Several years ago, I didn’t drink coffee and Sarah made just enough for her to take to work. Several years ago, our cars were fairly low mileage and recently purchased so replacing them wasn’t on the horizon. Several years ago, we were planning to move into the country in a few years, which isn’t true now because our goals changed. Several years ago, I made my own laundry soap in a giant bucket; now, I make it in a small container. Several years ago, we pieced through child care costs at a local daycare center; today, we piece through soccer league costs and band instruments.

Big things change. Little things change. It is only through constant reflection that you can continue to make the right choices based on the person you are right now and will be moving forward, rather than the person you were a few years ago. It is only through regular reflection that your choices reflect your situation right now and moving forward, rather than the situation you were in a few years ago.

Here’s my final exercise for you: make reflection on your life a daily part of your life. Every single day, spend some time actively and seriously thinking about what you’re doing in some aspect of your life. It can be a big picture thing, like whether you’re saving for a car or a house down payment. It can be a detail thing, like whether your laundry procedure makes cost-effective sense or whether there’s a way to have a delicious cup of coffee each morning at a lower cost or whether you made a good spending decision the other day when you were out with your friends.

Just focus in on one aspect of your life and ask yourself whether you’re making the right moves in that area right now, for the life you have right now and the one you’ll have going forward. Don’t just assume you’re doing things right; you’re probably doing things right based on your life a few years ago, but that doesn’t mean you’re doing things right based on the life you have right now.

You might decide that you’re doing it right, all things considered. You might decide that you could be doing things differently, but you’re not entirely sure what you might do that would be different (that’s often the time to do some research and then some further reflection). What you’re doing is updating that jigsaw puzzle of life so that the picture matches where you’re at now and where you want to be headed.

As I noted above, I often write in a journal when I do this, but I also do these kinds of reflections when I’m driving somewhere or when I’m waiting at a doctor’s office, or when I’m sitting in the car waiting for my oldest child to finish his soccer practice and I don’t have anything to write on.

Every once in a while, it might be a good idea to walk through this entire series again, starting from the beginning, just to make sure that you’re doing everything in a way that reflects where you currently are. You might find that different tips and strategies jump out at you compared to what seemed important a year or two ago.

The goal, as always, is to work toward a better life – financially, professionally, personally, and otherwise.

Good luck.

Trent Hamm
Trent Hamm
Founder of The Simple Dollar

Trent Hamm founded The Simple Dollar in 2006 after developing innovative financial strategies to get out of debt. Since then, he’s written three books (published by Simon & Schuster and Financial Times Press), contributed to Business Insider, US News & World Report, Yahoo Finance, and Lifehacker, and been featured in The New York Times, TIME, Forbes, The Guardian, and elsewhere.

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