Using a Journal To Solve Financial and Personal Problems

Jill writes in with a really great question:

How exactly do you use journaling to solve your financial problems? Don’t get how writing in a daily diary can help other than maybe documenting when things happened.

As always with questions like these, my answer started off as a shorter response in the reader mailbag, but the answer kept growing and growing and growing until it was clear that it deserved a post of its own.

So, let’s start right at the beginning.

What Do I Mean By “Journal”?

When I talk about writing in a journal, what I specifically mean is that I’m taking out a notebook and, in my own handwriting, puzzling through something that troubles me in my life.

I take a situation that I’m unhappy with and try to figure out why I’m unhappy with it. I take a life problem that I can’t solve and I try to piece through how to solve it. I take a decision I’m facing and try to figure out what the best option is. I take an idea that I don’t understand and work through it, or I take something that I’m not quite seeing the consequences of and piece through the consequences of it. Sometimes, I’ll just step back and evaluate my life as a whole, or some aspect of my life. Sometimes, I’ll try to piece through the goals I currently have and whether they make sense any more and what my pan for that goal should be.

Basically, when I write in a journal, the purpose is to deeply and seriously reflect on something in my life and figure out what the best path forward is.

It’s worth noting that I do this kind of thinking constantly, during many moments of downtime. I’m usually reflecting on some aspect of my life or visualizing some aspect to come whenever I’m driving somewhere down a rural two lane road or taking a break from working or weeding the garden or doing anything that doesn’t require full focus. I’m addressing something like that in my mind whenever I have a gap to just think. I’m turning over an idea or a life situation or something.

So why use a journal, then?

I pull out my journal when the problem is particularly difficult, or when making the right decision is particularly important. It becomes a focusing point for something that I really want to deal with and understand.

The reason I choose a paper journal and a pen is because it helps me think and concentrate and focus, which helps me figure out problems. This isn’t an unusual thing – there’s a lot of research out there indicating that you learn and think better when writing ideas out by hand. Haptic nerves are activated by handwriting that aren’t activated at a keyboard, and the speed of handwriting is slow and thoughtful. It adds up to a situation where I’m often able to dig far deeper into a problem in my life or a new idea that I’m ever able to do while driving around – or even when typing at a keyboard.

(You’d be surprised how often the germ of a post for The Simple Dollar arises when I’m sitting there with my journal, puzzling over some aspect of my life. I’ll jot that core idea down elsewhere on an “idea list” to research and cultivate further, but many of my posts spring into their nascent form while journaling.)

To really drive home how journaling helps me with improving my finances (and financial-related aspects of my life), I’m going to give four concrete examples of how I’ve used my journal to process financial problems in the last several months.

Example #1 – When (and How) Should We Replace Our SUV?

Our SUV, which we bought off of Craigslist almost a decade ago, has been a very reliable vehicle, but it’s simply getting old. There are lots of little issues going on with it, from worn out struts to a weird transmission issue. There are about five major repairs that are coming up around the bend, and several minor things that should be done to it (like replacing headlight covers and fixing a small spot of rust).

Is it time to replace it yet? Or can we get a few more years out of it?

I sat down and worked through this puzzle in my journal. I got some estimates of what all of the repairs would cost to get the vehicle back into tip-top shape (about $4,000, all told) as well as just the more critical ones (about $1,500, all told). I looked at the prices for the type of vehicle we would replace it with – a late model used SUV or van, as we have a family of five to transport.

I also looked deeply at our usage of the vehicle, particularly during the academic year. During the summer, we’re effectively a one-vehicle household; it’s during the school year that we really need two vehicles. What are those scenarios where we really need two vehicles? Is it possible to survive with just one vehicle?

I wrote down all of these things, and as I was doing it, I gave each point some thought. I eventually came to the conclusion that it makes the most sense to hold onto the vehicle for a while, doing the critical repairs for now, and then evaluating our next step with it as we approach our next long “road trip” summer vacation, penciled in for two summers from now.

It was through taking the time to slowly work through those questions in one coherent block that led me to the best conclusion for the situation.

Example #2 – Should I Launch a New Side Business?

I had a vague idea for a side business that had been floating around in my head for months, but I hadn’t actually done anything to build it into something more than just a thought bubble.

I sat down with my journal and just fleshed out, step by step, what I intended to do with the side business. While I didn’t quite use the same formality, I actually walked through the basic structure of a business plan for a side gig that I described in that earlier article.

This largely took the form of notes. I was brainstorming the ideas down on paper so that I could see them all together. Often, during the process of brainstorming, I would clarify some earlier thought or come up with the next logical step in the plan.

This ended up filling several pages in my journal. At the end, I concluded that the idea was really good, but I do not have the time to devote to it to make it really work.

So, was all of this worth the time? Absolutely! It helped me work through a big idea I had in my head, one that had kept bouncing into my thoughts and leaving me wondering if this was something I could pull off. If I ever decide that I do have time for this idea, I basically have the structure of a business plan already down on paper. It also gave me a few ideas for other things I’m doing in my life, including The Simple Dollar.

Example #3 – Figuring Out Meaningful Gifts

In the spring, there’s a month-long period where there are several gift-giving occasions within our family. From late April to early June, our family ends up giving gifts to several people.

What I’ve found is that it’s much easier for me if I step back before that “season” starts and figure out the gifts I’m going to give all at once.

So, one journal entry, written about a month before this “season” began, consists of nothing more than a list of all of the gifts I have to give during this “season” and then some pure brainstorming for ideas.

The goal here isn’t just to come up with a bunch of gifts I can easily get off of Amazon. I can do that a few days beforehand with ease. The goal is to come up with truly thoughtful gifts, some of them homemade. Giving myself a lot of lead time makes it possible to think through gift ideas and come up with plans to make cool things.

I was able to plan ahead for a wonderful birthday for my wife. I was able to plan ahead for a homemade Mother’s Day surprise from my kids to my wife, as well as from our families as a whole to my mother and my wife’s mother.

This journal entry gave me time to stop and think about these things, working through several ideas and whether they made sense and whether I could pull them off.

Example #4 – Correcting Bad Spending Habits

A few months ago, I went through a period where I badly overshot my hobby budget two months in a row. I gave into some spending temptations and didn’t properly account for some of the spending that I did.

This needed to stop. I sat down with my journal to come up with a game plan for fixing it.

The first thing I did was list out all of my hobby spending over those two months. I just made a giant list of the expenses and totaled them up.

I then went through them, asking myself why I spent that money. I tried to write down a sentence or two for each one that explained why I spent the cash.

After that, I went through the things that I wrote and looked at the patterns. The biggest pattern that I couldn’t help but notice is that I would wind up spending hobby money after reading hobby-related websites and then I didn’t properly account for it (often because I used PayPal).

So, what could I do to solve that problem? I sat there and just brainstormed solutions and wound up coming up with a few that really made sense to me. The best idea was to de-link PayPal from other accounts and only use it if it has a balance in there. If I need to use it for another purpose, I have to manually fund it. This cuts me off from one frequent financial mistake. Another solution is to simply check out of visiting hobby sites that tempt me to buy and instead spend that time doing something hobby related.

Note, of course, that these are just four examples of how I use my journal. Now, let’s jump into my actual practice. What do I use? How do I do it?

The Mechanics of How I Journal

When I journal, I like to write on a page with plenty of space. I typically use composition-sized notebooks, not pocket notebooks, but not full-sized notebooks that people use for school, either.

The inexpensive composition books one can buy at stores work just fine for this (I prefer college ruled), but I really like the Baron Fig Vanguard and the Leuchtturm 1917 medium notebook, both with a dot grid pattern on the pages. I prefer dot grid when I mix writing and drawing things and making columns and rows, which is exactly what I do when I write in my journal. Those notebooks are expensive – I often receive them as gifts and use them up before moving on to inexpensive composition books.

To summarize, when I buy journals for myself, I usually buy these (which you can buy very cheaply right now during back to school season) though I often receive nicer ones as gifts from family members who observe my frequent journaling and note-taking.

What do I use to write with? I typically use these pens or these pens, whichever is cheaper. I buy them by the dozen box and then replenish whenever I find them on sale. These pens write with a very narrow line, are very reliable, and seemingly never leak. They’re also inexpensive enough that I don’t feel too bad if I misplace one.

In other words, I typically write in a composition book that I got for $0.25 to $0.50 (during a back to school sale) and a pen that cost about $0.50 to $0.75 (depending on the sale). I generally can fill two or three composition books before a pen runs out of ink, though I’ll use the pens for other things, too.

This isn’t an expensive activity. I probably use $0.05 in materials every time I journal.

I typically do this when I’m alone, often on a lap desk in a quiet room or at the kitchen table. I find it distracting to focus on a life problem when others are around because I’m usually throwing out my own thoughts without any filter and I don’t want them to be shared, plus the noise and action of others provides a distraction.

I do not do this every day. I do it when I have something that’s on my mind that I want to work through and figure out. I might do it three times in one day, then not touch it again for a week.

I usually start by just writing and writing and writing. I try to brain dump everything that’s in my head. When I feel that going dry, I then organize those thoughts a little bit. I read back through them, figure out what’s meaningful, and underline it or mark it somehow. At that point, I usually figure out some way to organize the thoughts – maybe I use a list of pros and a list of cons, or maybe I simply pick out a few of the best ideas and work through them a little more to make sure they work logistically.

Sometimes entries take less than a page. Other times, they’ll take up tons of pages. Sometimes I’ll finish and have a happy solution in fifteen minutes or half an hour. Sometimes, I’ll keep coming back to the same problem again and again and not come to a solution until I’ve been plugging at it for hours. It’s not consistent, nor should it be.

In the end, it comes down to this: I have a problem on my mind. I pick up a pen and a notebook and dump out all of my thoughts related to that problem. I then organize that big brain dump and see if there’s a solution (or a path to a solution) in there. I refine things by rewriting and organizing until a solution emerges.

In truth, all of this is a conduit for focusing and organizing my thinking. Without doing this, my thoughts tend to go all over the place on a subject and rarely come to a conclusion; even when they do, the conclusion is often not the best one. Whenever a decision seems important at all in my life, I turn to journaling to put it all down on paper.

Some Final Thoughts

My recommendation to you is a simple one.

Think of the problem in your life that’s bothering you the most. It’s the one that keeps peeping into your thoughts. It could be anything. It might be an untapped opportunity or a financial problem. It might be completely unrelated to finances – maybe you’re struggling to find time for something you care about or there’s a big home improvement project that you don’t even know how to tackle.

Whatever it is, set aside about forty five minutes or so and sit down with a pen and a piece of paper.

Think about the problem and start writing. Write the problem itself down. Write down what worries you about it. Make a list of all of the steps that need to be done. As it comes into your mind, write it down by hand. Let the benefits of writing by hand benefit you.

It doesn’t have to be perfectly organized. It just has to come out of your head onto paper.

Keep going with it until the ideas cease flowing. What you’re going to have is a giant mess of ideas. You’ll have bits of description of the challenge you’re facing. You’ll have a bunch of raw ideas about solutions. You’ll have bits of information that are relevant to the situation. You’ll probably have some bits that are just raw expressions of your feelings. It’s all good.

Now, go back through what you wrote. Mark anything that seems really worthy on your second passthrough – I often underline it or mark it with a big asterisk. You’ll probably find that some of the things you wrote before trigger more thoughts, so write them down below.

Do this a time or two until you have a bunch of worthwhile stuff highlighted. At that point, start organizing the highlighted stuff into something more cohesive. Usually, what you’ve highlighted amounts to the clearest description of the problem and some of the best solutions you’ve conceived of. Collect all of that stuff together.

At that point, you’re probably fairly close to being done. Spend some time working over those solutions that you’ve come up with, figuring out how you’re actually going to pull them off. How are you actually going to do these things? (You may have concluded that the idea just won’t work, and that’s okay, too.)

Take your final conclusions and plan and translate them into action. Add some things to your to-do list. Spend some time right away on the plan you’ve invented.

That’s the power of journaling. I’ve found almost nothing better for solving life’s problems. The act of just writing everything down seemingly performs a magic trick on the mind, unlocking ideas and connections that just don’t come up when you’re thinking about things in a fleeting moment.

If you found the exercise useful, get yourself a few composition notebooks and start using the technique regularly whenever you find yourself struggling with a problem in your life. You’ll be amazed at how the process pulls up solutions for you.

Good luck!

Trent Hamm

Founder & Columnist

Trent Hamm founded The Simple Dollar in 2006 and still writes a daily column on personal finance. He’s the author of three books published by Simon & Schuster and Financial Times Press, has contributed to Business Insider, US News & World Report, Yahoo Finance, and Lifehacker, and his financial advice has been featured in The New York Times, TIME, Forbes, The Guardian, and elsewhere.