My Life Philosophy for Managing Money

Do you have a personal mission statement? How about a financial mission statement?

I have neither of these. I do know, somewhat vaguely, what my life’s journey is supposedly all about. But my financial destination is not clearly defined.

Theoretically my life is a journey to my debt free future, hopefully comfortable and financially secure retirement, and lots and lots of travel. However, this destination does not necessarily give me a sense of order, structure and organization. I am not even sure I am heading into the right direction.

I never had a conversation with myself as to what I want out of my financial life. I think I finally explained it to myself in the previous paragraph what my ultimate financial mission should be all about.

It sounds really good but I have no clue (yet) as how I am planning to get there because I never thought about:

  1. My long-term financial objectives. I am a short-term goals achiever, and maybe I need to start thinking in a little bit longer terms.
  2. Any important dates in my financial life. I want to be debt free but I never said to myself that I want to be debt free by a certain date. There is a need to set some dates.
  3. Any financial storms that might come my way. No one can escape those no matter how hard they try. The difference is that some will face them fully prepared. Some of us, will face them lost, confused and unsuspecting. I am afraid that I represent the latter group.

Defining a destination is only half way done. But besides thinking (and dreaming) about what I want, I also need to define to myself how I am going to reach my destination. Just because one day I decide to exchange my reliable used Ford to something newer, brighter and smaller (pink Fiat!), it doesn’t mean that I am moving forward to my financial destination.

Debt produces an absolute sense of urgency and creates anxiety.

My Fight Plan

Step 1 – Keep my spending weakness under control.

I started my journey to become debt free a while ago. In fact, the first and the most important step was admitting on this blog that I have a spending and shopping problem. These problems put me in debt. Unfortunately, I don’t think I will ever get rid of these bad habits because I still do miss buying stuff and spending.

February was an especially tough month as I struggled to suppress all of my spending urges.

Step 2 – Stay disciplined and persistent about paying off debt.

This is self-explanatory and easy to do if you have discipline, determination and a huge desire to break free from underneath the cold and unkind hold that debt has on us.

Step 3 – Do not accumulate any more debt. Pay cash for everything.

This world is very materialistic and full of temptations. I see them, I sense them, and I am damned because I love them.

I am weak when it comes to stuff. I am also really weak when it comes to travel.

February is a good example. My blog made some money and what did I do? No, I did not shop. I talked Beaker into taking a small trip over the President’s Day weekend. We paid cash for the trip. That is a good thing, right?

30 thoughts on “My Life Philosophy for Managing Money”

  1. This is an interesting topic that you brought up. I do not have a mission statement for my long term financial goals or even know what those goals are. My main goal right now is getting rid of consumer debt, but I haven’t thought past that besides the usual saving for retirement. You have given me something to ponder today 🙂

  2. The point about not accumulating any new debt is something that I think many people overlook. Paying down $500 in debt only to add back $250 (or worse, they exceed the $500) is completely defeating the purpose, yet I see it time and again. Good for you for recognizing this and taking measures to stick to it!

  3. i have a very similar fight plan, aloysa..
    the key is not falling into old traps.. i now realize that more spending will not lead to more happiness..

    it just gets tough when i am having a bad day.

  4. It’s hard for me to strike the balance between doing fun stuff today vs. preparing for the future. I don’t think a PERFECT balance is necessary or even possible, but as long as you understand your weaknesses and have a plan for attacking them, you are doing better than 50% of the folks other there.

    1. Yes, it is difficult to strike the balance. I don’t even think about achieving anything perfect. I just want to try and see where it takes me.

  5. I have written about personal mission statements before, but I don’t have one. I feel like like is too fluid and ever changing to make a mission statement – even a financial one. My financial priorities will ebb and flow, but a goal is to definitely get out of – and stay out of – consumer debt.

    1. Missions statements should change with time. I think it is unavoidable because we change as well. Our goals in life change as we age. But putting my goals in perspective really helped me to realize that maybe I should have some kind of plan.

  6. Aloysa,

    Paying cash for everything will work well to control spending and to avoid additional debt. Also, when you pay with cash, you think twice before spending that cash.

  7. Great post topic. It inspired me to plan to write a post on my blog about this same topic. I sat down a couple of years ago and wrote a life mission statement. I haven’t done it on paper for my financial life, but I do have some crazy goals in my head. Here’s what they are:
    – Have $100,000 in my savings account when I turn 30
    – Have $150,000 in my savings account when I turn 31 (This will give me the ability to buy my first home, with cash, at that point if I choose to.)

    They are crazy goals. I’ll be 28 in a little over a month, so that only leaves me with two years on the first one and three on the second. I’ve ran the numbers though and they are both very possible. Why, you may ask, am I doing such a crazy and financially “wacko” thing? Because I want to change my life. I really think that having a large amount of “life options” in the bank can change my life. Writing a check for my first home at 31 years old (potentially with my wife, if I have one by then), will be a life changing experience and a dream come true for my future. Living without a mortgage payment for the rest of my life is a goal of mine, which will allow me to have more financial freedom to do the things I dream about, like starting my own business, traveling and spending time on things that are important to me.

    1. I need to start being specific with my goals. Your goals are ambitious not crazy. Sometimes we need to set up somewhat “crazy” goals to keep ourselves motivated. It doesn’t really work for me. 🙂 I need to write a post about it.

  8. Thank you for sharing your thoughts and plans!

    I can definitely relate to your thoughts on spending and your spending weakness.

    You’ve identified 3 key steps in your Fight Plan. I like them. I’ve been struggling to put a plan together since I started my PF blog at the beginning of this year. I hope you do not mind if I adopt your 3 steps as my goforward strategy towards paying off our huge debt.

  9. My mission statement when I was in my twenties was to become a millionaire by the time I reach 40. Well… that’s not going to happen… 🙁

    These days, my goal is to pay off all my debt including my home mortgages because once my house is paid off, I should be good financially…

  10. Specific goals are great but specific ways to achieve them are even better. I’m definitely falling short each month of the amount I have to pay down in order to get debt free by June 2013. I think I need to focus solely on ways to increase income in the coming months, as I’ve reduced expenses more than I ever thought I could!

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  12. I also want to be debt-free but your post made me realize I have never thought about WHEN! I definitely have to set a date because it will make the whole thing much more tangible!

  13. Lisa @ Cents To Save

    Yep, I do the same thing. I have goals… but they are not all that specific time wise. When things settle down around here I will have to come up with a personal mission statement too. Maybe I need to be specific about WHEN I am going to come up with a personal mission statement….Lol!

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