Unfortunately that little gem of a title is not my work. Instead, the title for today’s post is the motto over at the the blog Afford Anything by the brilliant Paula Pant. Paula’s blog will teach you a lot, but the most important piece of information that comes from it is that brief motto.
Embedded in those five little words is the notion of priorities and sacrifice. First, you have to figure out what the specific priorities in your financial life? Is it a vacation? Is it paying off debt? Is it buying baby furniture? A house? Whatever it is, unless you have millions of dollars, the important thing is to focus on a specific goal and to work toward it. That is why Dave Ramsey is probably so successful. He preaches a formula, the baby steps, that if you work up the baby steps that you can get out of debt, save for emergencies, save for retirement, and gain a semblance of financial freedom. There is real wisdom in such a simple approach. I don’t necessarily agree with everything he says, but I have to admire the basic formula put forward. Apparently, it has worked for millions of people who take his classes and listen to his show.
The second item is sacrifice. In order to achieve any financial goal you have to have some sort of sacrifice. Often that sacrifice is short-term for long-term gain, particularly if you are paying off debt or investing. But in putting money toward one specific goal you are taking it from another. That is, in some respects, the very essence of sacrifice. There are different levels of sacrifice, but it is sacrifice nonetheless.
The Problem At Reaching Our Balance
Here’s the rub in my particular household I have too many financial priorities. I go back and forth to the point that it literally drives my wife crazy. I want to take a vacation, pay off debt, and invest. I don’t focus on one particular goal and go for it. Rather, I try to do everything at once. That might not be a problem if you want to wait years to achieve a goal, but if you are financially impatient like me focus is a necessary commodity. So I go against the very motto that I admire then I stretch myself thin and worry that I am not doing enough in my financial life. And the truth is that I don’t focus enough on a specific goal so that I can later go onto the next one.
The other big problem is that even though I intellectually know this I don’t pull the trigger on one specific goal or another. I continue to hem and haw and go back and forth. Just because I write a personal finance blog doesn’t mean that I still don’t make mistakes. I know the answers. I know where I want to go, but the path is often a windy one.
For example, if I really want to get out of debt then I should reduce my retirement savings and focus on paying off that debt as expeditiously as possible. By my calculations I could get it done in a year, but that is a year of losing investing. It isn’t forever, but I hate the idea of curtailing savings, even though I know paying off debt is an important thing to do.
Even as I write this blog post I am not sure what I am going to do. Will I curtail those retirement savings and focus on paying off some of this debt or will I just continue to work as is?
Part of this blog is to chronicle my journey and struggles as I move toward greater financial independence. This is probably my biggest cross to bear.
The Bottom Line: Paula Pant is right. You can afford anything, but not everything. Priorities and sacrifice are the paths to greater financial independence and financial freedom. The great thing is that each person is different when it comes to personal finance. The bad thing is that there is no specific formula that works for everyone. If that was the case then everyone will do it.