One of my most vivid recollections of my entire financial turnaround is how I felt during the night when I first really realized that my finances needed to change. Our first child – our only child at the time – was just six months old and he didn’t want to go to sleep that night because he was teething. I couldn’t sleep – money worries were flooding my every thought, so I just sat in the rocking chair in his room almost the entire night, rocking him back and forth.
During that moment, I felt like a giant failure at life. My mind was loaded with all of the financial missteps I’d made and what those mistakes were costing us. I had spent so much money in so many foolish ways and because of those choices we were in a bad place.
We had a ton of debt. We had nothing saved for buying a house. We had bills that we couldn’t even pay.
I felt like a complete loser.
Looking back, though, I see a lot of other things in that picture. I see a man who loved his child and his wife deeply. I see a man who worked incredibly hard to get a good job and to hold down that job. I see a man who was willing to re-evaluate his life and accept that he could, in fact, make better choices. I see a man who accepted responsibility for his mistakes.
I don’t see hopelessness. I see a lot of hope.
I was lost in the consequences of my money missteps at that moment, but the truth is that those money missteps don’t define me. My value was – and still is – far more than just my finances.
I like to look at my life as being much like a dandelion in the summer, after it has aged and the top has turned white.
There’s a long green stem that’s straight and unchangeable – that’s the past.
There’s a little head upon which a bunch of the petals or florets are attached. That’s the present.
Then there are the florets. They are many, pointed in all directions, and they can go almost anywhere. They’re all attached to that little head. Those florets represent the future.
The past is that unchanging stem. You can’t do anything about it. It’s just there.
The present is that little head. It can hold onto some of the florets and let other ones go. That’s the choice you have all the time – you can increase the likelihood of some futures and let go of others.
The future is one of those little florets. Which one depends on what you do with the present.
The destination of those florets has almost nothing whatsoever to do with the stem. It has much more to do with the present, and which florets you hold onto, and the changing winds of life.
The Stem – The Past
During my twenties, I made more financial mistakes than I can ever count. I went out to eat all the time. I bought mountains of unread books. I bought tons of unplayed video games. I bought many, many unwatched DVDs. I had an enormous professional wardrobe. I went on a ton of expensive trips. I “bought” a really expensive vehicle with a fat loan. I “bought” a bunch of furniture with loans. I made minimum payments on all of my debts. I went out constantly for drinks and dinner and golfing with a circle of young professionals.
The thing was, virtually none of those things brought me any lasting value, or brought me significant value over what a much lower cost version of the same item would have brought me. If we’re looking at the real value I got out of those things, there is literally nothing on that list that I couldn’t have had for free or for a much, much lower cost.
Those mistakes – and many others – undeniably held me back from achieving a lot of things that I would love to have achieved in my twenties. I came close to the end of my twenties with a big pile of debt, a frustrating career, and not many assets in the bank.
I feel a lot of regret about those mistakes, too. If I had just been a little smarter with my money, I could have done this and that and the other thing and my life would be so much better now!
In the end, though, those mistakes don’t define me. I am not a “financial failure” for life because I made some missteps along the way.
Your past mistakes are just that – in the past. They do not define what you choose in the present. They do not define what you can choose in the future.
Your money mistakes – or your mistakes in other aspects of life – do not mean that you are an eternally flawed person, either. You always have the capacity to improve your decision making game. Always.
Your money mistakes don’t define you. Your value is far more than your finances.
The Head – The Present
When you are focused on finances, it is easy to get caught up in the idea that you’re somehow a failure because you made a lot of financial mistakes in the past. Often, it’s so disheartening that it pushes you to give up on future financial progress.
You look back at the road you’ve been down and you see how many times you took the wrong turn. You think about where you could be if you had made better turns, and it just feels hopeless.
Trust me, I’ve been there. On that night holding my son that I talked about at the start of this article, I sat there all night feeling regret and shame and a sense that I could never really fix this, that I was somehow a failure.
The thing is, I wasn’t a failure. My past might have involved some wrong turns, but my past is not my present. There are many, many junctions available to me right now, and there will be many, many, many more to come. Right now, I can start choosing the better route a little more often than I once did, because even a few better choices, if done regularly, can make a ton of difference.
Five simple things kept me going and convinced me that my past did not define my present or my future.
One, I had a lot of good things in my life. They had to come from somewhere. I had an absolutely wonderful wife who has been a part of my life since childhood and has been at my side all the way along, first as a friend, then as a lover, then as a spouse and life partner. I had a wonderful little child who was calmed just by being around me. I had a few really good friendships with people I could rely on when the chips are down and celebrate with when things are going well.
I had a lot of simple things in life that I really valued, like the warmth of the summer sun on my arms and the feeling of contentment of being lost in a good book. I had a really good education that I earned with a lot of hard work, and a really good job that banked on that education.
I also had a pretty good character in many aspects of life. I was very self-motivated. I was a devoted lifetime learner. I could solve certain types of problems really, really well. I had a good sense of humor and knew how to use it to put people at ease and make them feel comfortable.
If you sit down and take serious stock of your life and start listing all of the good things that you have even after your financial mistakes, you begin to see that it’s not a train wreck after all, that things really aren’t that bad, and that you have a lot of things to build upon.
Two, the actual path to turn things around was actually really simple, and my past didn’t matter regarding that plan. There’s no denying that I wasn’t in a good place financially, but the actual tools that a person can use to turn around their personal finances can be used no matter what their situation at the moment happens to be.
You start with spending less than you earn. Virtually anyone can do this in any situation. You do that every week, every month, every year like clockwork, and you use the money that you earn but aren’t spending to pay off your debts, build an emergency fund, and invest for the future. That’s really the core of it.
Each step in that journey has a pile of tactics you can put to work.
The first step, obviously, is spending less. Frugality is all about getting maximum value out of every dollar that you spend. It is not about misery. It’s about recognizing that a lot of the things you spend money on really aren’t bringing you much value, thus cutting back on that spending is going to bring you a lot more value for your dollar. For example, try buying store brand versions of all of the ordinary nonperishable foods and household items you buy instead of name brands. Try making some meals at home instead of eating out. Instead of buying something, just see if there’s somewhere you can borrow it. Instead of buying something impulsively, stick it on a wish list somewhere and see if you still want it in a month, and if you do, buy it then. See if you can cut down any of your monthly bills. I can list hundreds and hundreds of little tactics for frugality – in fact, I have.
The next step is summed up in the word earn. How can you increase the income coming into your life? This usually takes longer to find success than frugality, but it can have an even bigger impact. Figure out what you need to do at work to get more hours or to get a raise or a promotion. Start building some strong professional connections, ideally ones that can help you get ready for and make the leap to whatever’s next. Figure out what your next career step is and start doing everything you can during every down moment at work to build a path to that next step. Keep on top of your field. Do things at work (and in life) that’ll fit well on a resume.
The next part is to rinse and repeat. Spend less than you earn each week, each month, and each year. Learn how to handle irregular bills so that you’re not surprised by them.
After that, start figuring out smart ways to use the leftovers. There are a lot of specific plans for this, but they usually boil down to building a small emergency fund (say, $1,000 in a savings account somewhere), then paying down high interest debt (anything with a double digit interest rate), then contributing to retirement savings, then building a bigger emergency fund, then saving for upcoming major expenses like a car replacement, then paying down low interest debt. That’s the order I generally recommend.
Those tools are available to you whether you’re working a minimum wage job with a lot of debt or you’re trying to make ends meet while making $150,000 a year.
All of those steps are incredibly simple, and most of them can be embarked on right now regardless of your financial situation.
Three, every little branch on that path offers me the capacity to go in a better direction than I otherwise would. Life offers you tons and tons of opportunities to choose a financially responsible path, and your past doesn’t matter regarding those choices.
I’m willing to bet that you have several purchasing decisions today where you can make a better financial choice, and if not today, sometime in the next few days. I’m willing to bet that you have several professional opportunities this week where you can either idle and waste time or start building professional opportunities for yourself.
Each one of those branches is an opportunity. You have a choice between a better financial direction and a worse one. Yes, there are always going to be other factors at play – a little bit of pleasure in the moment, for example, or a little bit of free time, or something else.
Just keep asking yourself if it’s really worth it to keep making those same mistakes and whether or not there’s something better down the other path.
Four, if you make a financial mistake, it’s not the end of the world and it’s not evidence that you’re a failure. A money mistake is a human mistake, and it’s also merely evidence that the plan I made wasn’t perfect, and nothing is perfect. It just means I have to rethink my plans and strategies a little. It’s like a recipe that needs just a little more salt or a little more cilantro.
A money mis-step does not mean the end of all progress. It does not mean that I’m a failure. It does not mean that everything I’ve been working on is crashing down like a house of cards. It just means, in this moment, I didn’t choose the best path.
Finally, every day offers new choices and opportunities. In a little while – maybe later today, maybe tomorrow, maybe the day after – another choice will come along, and in that new choice, I’ll have an opportunity to do it the right way, the better way, the way that leads to the tomorrow that I truly want.
It has happened virtually every day of my adult life. Sometimes, it happens many, many times a day. I’m offered a choice. Do I buy this expensive thing I suddenly want, or do I wait? Do I buy the store brand version or the seemingly-identical expensive name brand version? Do I sit here and look at Facebook during half an hour of downtime at work, or do I do something that improves my career?
Right in front of me is this choice, and if I take the right one, it’s going to open up a new path for me, one that’s just ever so slightly better than the one before. It might not be the most fun option in this moment, but that’s okay because it’s leading to a much better place.
The Florets – The Future
Our lives up to this point are a mix of good choices and bad ones, and together those choices have ended up (along with the things outside of our control) determining exactly where we are right now in our financial life and in every other aspect of our life. It’s left us at a junction where we have certain options on the table in front of us. Those options could be better, and they could be worse.
Every time you make a financially smart choice, you slightly improve the options that are on the table for you tomorrow. Often, the change is so slight that you don’t see it, but it’s there. Make the smart choice tomorrow and the choices continue to improve, little by little.
Your past has nothing to do with those choices. Your mistakes have nothing to do with what you choose today. They might have played a role in shaping what options are available to you, but they have nothing to do with the option you choose, and that option you choose will also help shape how good the options are tomorrow, and the day after, and the day after.
You can’t magically change the road you’ve been on. Nothing can do that. You can’t wish for better options on the table. All you can do is look at the choices in front of you and choose the one that will give you the best options tomorrow while still being reasonable today.
So, choose that store brand. Choose to spend some time on documentation rather than reading Facebook. Choose to make a great meal at home instead of just ordering delivery.
You have the power to make that choice, right here, right now. That’s because you are more than the mistakes of your past. You have the capacity, right here and right now, to choose a better path. You are not defined by the mistakes you once made. Your options might be shaped a little by your past, but your capacity to choose the best option, right here and right now, and your capacity to shape tomorrow’s options to be just a little better? That’s all about you, today and going forward.
You are not defined by your missteps. If you were, you’d keep making the same mistakes over and over again. You are so much more than those mistakes. Right now, you have options before you on the table, and you have it well within yourself to choose the best one for your future, and then to make those choices each day going forward.
That’s your value. Not your mistakes, not your missteps, but in your capacity to make a better choice and make a better future. You are more than your past.