How did the tortoise defeat the hare? By being wise, steady, and focused on the finish line! Here are some tips on how you can win your financial race (a marathon, not a sprint).
ALWAYS follow a budget.
According to a recent Gallup Poll of over 1,000 people, only one in three Americans prepare a detailed household budget. That’s not only how millions continue to drown themselves in debt, but also how many others get disoriented and wander back into the land of borrowing. Even if you are on solid financial footing, it is imperative to maintain a monthly budget to stabilize your four financial pillars (food, shelter, utilities, transportation), while also carving out room for saving/investing, growing/maintaining your emergency fund, giving, fun, and other things you need or want to do.
ALWAYS have goals to aim toward.
Anyone who has achieved a consumer debt-free ledger and has built a rainy-day fund understands what it takes to set a goal and stay focused until it is reached. To maintain an ideal cadence while you are running the wealth-building marathon towards the retirement finish line, think about what additional goals you can set. Some examples include:
-Pay off the house in no more than _______________ years.
-Have _______________ dollars in each kid’s college fund by their 18th birthday.
-Reach a net worth of _______________ to feel comfortable retiring.
-Save up to buy _______________ or travel on a bucket list vacation to _______________.
Zig Ziglar famously said, “If you aim at nothing, you’ll hit it every time”. So, communicate within your household to draw those boxes important to you, and what it will take financially to check each one off.
When you have purposeful goals to aim at, don't be surprised how often you'll hit the mark!
ALWAYS celebrate milestones.
When paying off debt, especially if it is a large amount, there are lots of times to celebrate along the way. Every time you can perform plastic surgery, eliminate a student loan, or turn a car payment into savings is a huge, measurable win. Once the debt is gone and you have gotten to a comfortable amount in the emergency fund, the milestones of wealth-building will still be significant but will not happen as often or as noticeably. So, take time to stop and smell the roses when you hit a big round number. For example, I noticed a few months back when filling out the Net Worth Tracker that my family had passed the half million-dollar mark. That was a big deal to me and my wife, so we took a moment to reflect, pop a bottle, and discuss what lies ahead.
As you make the necessary short-term sacrifices to win with money so your family can prosper over the long haul, it is important to recognize milestones of your success while will motivate your future best practice. The Terry family celebrated a recent net worth achievement with a Disney Day.
NEVER borrow money again.
Plain and simple: If you can’t afford something, don’t buy it. If you really want something, create room in the budget and save to pay cash for it.
Maybe you have a desire to buy a nicer car, but you can’t afford to pay cash so are considering a loan. Bad idea! According to LendingTree, the average vehicle loan duration in America is around 68 months, with an average price of over $26,000 for used, and north of $40,000 to buy new. Per U.S. News, a vehicle loan interest rate can range from around 13% to 24%. Let’s play the averages and say you plan to take 68 months to pay off a $33,000 automobile at a whopping 18% interest rate:
Do you want to set $50,000 or more on fire? If so, buy a new car on payments! America has normalized debt in ways such as car loans, including the very average scenario above.
But wait! You remember that massive debt is common in our country, but you are a financial unicorn. You decide to make a modest car purchase in cash, and take the money you would have wasted on a depreciating “asset” and instead invest it:
As shown above with a routine loan example, by not conforming to ridiculous car culture you will add many thousands of dollars toward your retirement nest egg.
Another example-Someone thinking they can behave like certain YouTube or TikTok personalities who claim they win by acquiring real estate with as little money down as possible (in addition to the mortgage on their personal home) and then flipping or renting each property. That strategy only works until it doesn't, or doesn't. If you want to upgrade your primary home at some point on a 15-year mortgage with a sizeable down payment, that’s understandable. Buying additional real estate on payments? Insanely risky. If you want to invest in anything (rentals, mutual funds, rookie cards, whatever), cash is still king.
NEVER rush big decisions.
Ultimately, there will be times in life where big money is spent on the good, the bad, and the ugly. We exist in a time of “now” where patience has so often gone by the wayside, replaced by instant decision-making. Even in an emergency, it is important to weigh all options before opening your wallet. It doesn’t matter if you are consulting with a professional on medical, financial, home, education, or leisure options. You may not like, understand, agree, or be able to afford the initial offering. Never be afraid to say no or take a pause to see what other opportunities or choices are in front of you. You also have the right and the obligation to ask clarifying questions and do your homework so that you can make big decisions in the best interest of you and your loved ones. Never feel that you are trapped or forced into driving down a road that looks unfamiliar or dangerous. Once you head in a certain direction, especially when going too fast, it can be extremely challenging to make a U-turn. Slow and steady always wins the marathon.
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