Last 4th of July, I wrote an article on comparison of financial independence with the American Revolutionary War. In particular, I looked at how important it is to:
• Know what you are fighting for
• Declare your independence
• Do not let initial defeats stop you
• Understand your enemy may come back, so be ready
• Realize your enemy can become your biggest ally
As a follow-up to the article, I thought I would look at some of the other similarities in the initial course of action that should be taken.
• Look beyond the initial reason to fight and consider what you really want
Last year, I discussed how the initial rebellion was for what we did not want (no taxation without representation). However, to be truly successful, we needed to look for what we really wanted (independence and freedom). People may get frustrated and angry for a short time with what they do not want (taxes). However, lasting change only happens when we move towards what we want (freedom).
Financially, we may rise up in arms against debt, higher health care insurance costs, taxes and stress of paying bills. These things tend to be something to get people riled up for a time. Yet, in time, people wander off in different directions aimlessly because there was no ultimate goal to move towards.
The first step in financial independence is to really understand what we want. Do we want financial peace, happiness, or something else? There is little we can do about taxes or higher health care costs other than vote and wait several years hoping our politicians can agree on a compromised bill that is acceptable. Yet, when we have a direction of what we really want, we can take individual steps towards that goal as we wait for other changes to follow.
We want better consumer debt protection laws because we get upset and angry when we are charged 18% or more for interest. However, our real goal is not lowering the interest rates rather what we believe that the high interest rates are doing to us, for example robbing us of our happiness due to working longer to pay the bills. We may become happier when we know we have better consumer debt protection laws, yet why wait that long for Congress to do something only to get discouraged until it gets here? Take steps now to monitor and manage your debt. Take steps to be happy despite what credit card companies are doing out there. If we don’t, we may end up waiting to be happy, hoping something out there will change to get us to where we want to be.
• Create a plan of action
Usually creating a financial plan seems daunting. What should we tackle first? Thus, we avoid make a daunting plan and take one step at a time. Doing one-step at a time is a good approach. However, a great pool player or baseball pitcher and catcher have a plan of action on how their current step will lead them to their next step. If George Washington only worried about the current day, he would have never thought a few steps ahead and planned a course of action to keep a rag-tag army from deserting which they almost did if it was not for the Battle of Trenton and Princeton which changed the momentum of the war.
Thus, come up with a plan of action. You do not need to do all the steps at once (better to focus on one step at a time). Yet, prioritize your plan in an order that makes sense and then tackle it one step/day at a time while seeing there is a path to reach your goals. You may find that your plan changes as new options and alternatives arise because a great plan is laid out first so that we can see the end in sight (believe that it can happen) and is flexible enough to handle changing circumstances.
For example, to get out of debt, you may start out with the following steps:
1) Set your intention with your spouse on getting out of debt
2) Call credit card companies to lower rates
3) Create a budget to figure out how much money can be paid towards debt
4) Follow up on budget – to see any problem areas that need to be corrected before the problems become overwhelming
By mapping out a plan ahead of time, we may be able to see issues come up ahead of time. Some people have tried to do a budget and reduce their debt without the buy-in of their spouse. When they do a budget, they feel great about it. However, when they get to the step of monitoring the budget, they realize it is not only their spending that they need to track yet also their spouse (sorry if I simplified this example to much). By setting up an action plan ahead of time, we are able to see the bigger picture and how the steps are dependent on the other. Thus, in this example, the person doing the budget may see the need to have a budget that the spouse buys into when it comes to the monitoring step. Thus, they see it easier to get the spouse’s buy-in before doing a budget, thus save aggravation by getting their spouse on board the debt reduction plan before the budget is created.
Or in another case, someone may call the credit cards companies first to lower their rates and get denied because they were late with their payments in the last 6 to 12 months. They may give up thinking that it is hopeless because they can not get past this step. Alternatively, if they have their plan in mind and think through the plan, they may discover that having a budget in place before calling the credit card companies back may give them more support on what they are able to pay to convince the credit card companies that things have changed and they are more financially responsible now than in the past. As I written about before, I believe that we are more determined and convincing when we call credit card companies to lower rates if we have a budget plan in place ahead of time (see Getting Out of Debt – New Approach to Calling Credit Card Companies. The order of the steps in your plan does not matter as much as seeing the bigger picture and thinking a few steps ahead of how to adjust your plan to handle issues as they arise. The worst thing is to get stuck and not seeing the bigger picture to determine a way out.
• Rally support
When we go into battle alone, we can find no one is watching our backs. When battle financial debt or other financial problems, it is always better to have a friend to talk to that will support you when you need a little extra push to get back on track. Plus, they may be able to give you suggestions on what to do next. Friends are our biggest ally. America would not have won the war if it was not for the support from France (first logistically and training, long before they jumped into the actual battles at the end).
Thus, find a friend who you feel can be a good coach and that you can trust. Sit down with them to lay down your expectations. There is a difference between being a friend to talk to for support and being a coach that gets in your face when needed. Thus, make sure your friend knows what you are expecting from them.
If you can find someone going through the same issues, it may be a good mutual support system. You will be able to share your ideas and examples with each other to make each other’s plan even better as you go through it together. Yet, still have someone else ready in case you are both stuck at the same point without any ideas of how to move forward.
For more examples on how to achieve financial independence, see How To Regain Power in Your Financial Life
And, have a joyous 4th of July where ever you are.