Getting More Done By Planning Less

Affording Happiness Getting more done

In my push toward mastering my finances I have made numerous changes. Many of these changes relate to a new appreciation (ok – an awareness is more accurate) for the wonders of frugality. In my young adult life, frugality was not even on the radar. It was not practiced by my family, friends or in fact any person I knew. When I decided that I was going to drastically cut the waste in my budget, there was a huge amount of low hanging fruit.

One of my strengths and occasionally one of my weaknesses depending on the situation is that when I decide to do something, it gets done. Usually this is strength. Sometimes, my drive to never fail leads to wasting time on projects that should fail but I refuse to let them slide gracefully to their demise. Also, I have been known to spend an inordinate amount of time in the planning phase of a new project in order to feel comfortable in my chances of success.

When does this become a problem? This is a problem when I take on too many projects at one time. When I decided to cut waste out of my finances, I had no problem identifying areas to place on the chopping block. Our spending was way out of line with our goals in almost every area including entertainment, groceries, dining, personal care (think cutting my own hair), pet expenses, vacations, gifting, repairs and maintenance, wasteful driving etc. etc.

Instead of proceeding in a reasonable manner by choosing one or two to work on at a time, in my typical exuberance and need to “fix” my finances completely in one go, my “to do” list was huge. Many of these items required some prep time in order for me to feel comfortable proceeding. For instance, as I had not been the grocery shopper in our house, I felt the need to closely watch our habits for several weeks, and take notes of our inefficiencies and areas that produced waste in order to maximize our grocery budget and health. Before I was willing to cut my hair for the first time, I was going to make sure I knew what I was doing! This included many online videos and online reading.

The problem is that when I was attempting to prepare for too many changes at one time, it greatly slowed down the rate at which I attended to any one particular change. While I am a HUGE fan of the “to do” list both as a way to reduce stress by organizing my thoughts and as a way to be more productive, a long “to do” list is very stressful. I ended up wasting time just starring at the endless goals trying to plan an attack and what was supposed to be a tool to be more productive became a roadblock to progress in any one area.

This lead me to the realization that I can actually be more productive by planning less. I trimmed down my list to those items that I thought would make the largest immediate differences. The rest I erased with the knowledge that they would likely appear again at a later time. I did the appropriate prep work, made the changes and reaped the rewards.
This had many beneficial effects to my progress. Instead of having numerous half completed projects and realizing no financial gain, I had a few completed projects each already producing tangible benefits. I was also much less stressed by having a shorter and more manageable list. When my list started to shrink, I would simply add back one of the items that I had deleted. I found this to be a much more successful strategy and am utilizing it today as I continually look for ways to maximize my efficiency.

In my previous post Lifestyle Goals, I expressed that one of my main goals for which I am even making all of these changes, is to spend more time with my family. In deciding that I can do more by planning less, I also get the satisfaction of living my life more in alignment with that goal.

A huge note of caution: This is only applicable to those with similar personality types as myself. If you are curious, I am an ENTJ by Myers-Briggs personality typing. If you find yourself on the opposite end of the spectrum and lack productivity due to lack of planning, planning even less will certainly not lead to more productivity! Getting to know oneself is very valuable in deciding on the best ways to induce wanted changes.

Has anyone else found this to be true?


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Oh Happy Day

Oh Happy Day Affording Happiness


It is so rewarding and fulfilling when a long-term goal you have set and diligently worked toward comes to fruition. When I sat down at my computer the first Saturday of this month, May 3rd 2014, I had a smile on my face before I started the computer up or even had my first sip of coffee. I have known for a few months now that this was going to be a momentous day and had been eagerly awaiting this Saturday morning all week.

I sat down, started my computer, logged into my online banking account and paid my last payment on my last credit card debt. Even better, it was one month ahead of schedule according to my financial goals. I put all the negative realities out of my head and disregarded that it was completely my fault I accumulated these debts and allowed myself to thoroughly enjoy my moment.

At first I just stared at the newly entered balance of “0” in that column in my budgeting software with a goofy self-satisfied smile on my face. Then my eyes wandered to the multiple other lines next to other credit cards that also read “0” but at one time or another were colorful red reminders of my mistakes. I love those current (and permanent) little green 0’s.

After soaking up some additional indulgent self-satisfaction, I began to look over the last few years of my progress. It is easy to do with good budgeting software. It took about 3 years and I paid off an embarrassingly large amount of debt. That amount was so large that I am too embarrassed to put the amount in this blog (at least at this point). That is despite the fact that as far as I know, this blog is completely anonymous and the only one that knows about it is my wife. This fact does not help with my readership : ).

I reflected on what I had to do to accomplish this and that actually made me a little less excited. It was in fact quite easy in the sense that I did not sacrifice even a modicum of happiness and never once felt as if I was depriving myself by managing my personal finances better. It just took some education and some self-awareness. I will give myself some credit however because I sought out the changes I needed to make, made those changes and stuck to them. Now those changes are my habits that, in part, make me who I am.

There is no desire or chance of us making the same mistakes as in the past and although it was a hard lesson to learn there have been benefits. By refocusing our lifestyle on what truly makes us happy and putting all available funds these last few years towards debt payments we have completely avoided the lifestyle inflation that tends to occur when one’s income jumps. In fact, due to a continued process of optimization and waste cutting, our spending has continued to decrease despite our increase in income.

There is of course progress yet to be made despite this oh so happy day. I have other financial goals to attend to which include paying off the remaining balances on our two cars by December of this year. As I am ahead of schedule on my credit card goal, I should have no problem meeting my car payment goal. I am throwing around the idea of using some of the time cushion I have created by reaching this goal a month early to start dabbling in some investing outside of my retirement accounts. I have read up to date on the MMM blog I have been steadily making my way through the Johnny Moneyseed blog which I have also thoroughly enjoyed. In his post learn to invest when you still have debt he offers the idea of learning to invest while still paying off debt. We shall see. While I feel that I have a solid beginners grasp on the concepts of investing in taxable accounts, I have not yet opened those accounts and am excited to begin.

On to goal number two!

How has your progress toward your goals been going?


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Pay Off Your Debt


Pay off your debt Affording Happiness

Now that you know how much debt you have and have begun to set up a budget, it is time to set up a strategy for how you are going to destroy that debt. There is no rocket science behind this but there are a few philosophies on the best way to approach the task ahead.

The strategy that I used/am using is paying off that debt with the highest interest rate first while making minimum payments on the remaining debt. It goes without saying that the fist step is accepting that it is absolutely ridiculous to accumulate any more debt. The next step is to accept that you are going to throw every extra dollar you can find into this plan while continually searching for more ways to cut your spending or even increasing your income. This method makes sense as the debt with the highest interest rate is costing you the most. Continuing to throw every dollar you can scrape up at this highest rate debt will obviously cause the balance to continually decline. As the balance begins to decline, the amount of interest charged each month also declines. This means every subsequent payment you make will knock off more and more of the balance (principle) and less and less will go toward covering the interest. This accelerates with time as the interest becomes less and less and eventually you will have hit a huge milestone, paying off your worst offending debt!

As you would be correct to assume, the next step is to tackle your next highest interest rate debt. The best part about this next step is that you will have the cash flow your were using to pay off your last debt plus the cash you were using to pay the minimum payment on the one you are currently paying off to throw at this debt. This balance will decrease over time at a rate dependent on how hard-core you are at cutting spending elsewhere.  Then you pay off the next highest interest rate and then the next and then the next. My strategy is to continue this until the debts I have are all under a 6% interest rate. These currently include my mortgage and my student loans. When the rates get below this general range, you have some decisions to make on how you want to proceed as it gets into a bit of a grey area concerning the best use of your extra money. That will be covered in a future post.

Another option instead of attacking the highest interest rate debt first, is to attack the debt with the lowest balance. There are some nice aspects to this strategy including the psychological victory of quicker positive reinforcement as you crush your first debt sooner. Also, it allows you to roll over the money you were putting toward that first debt sooner to the next debt and on and on. This is a fine option and one that many prefer. I prefer the other method better as it just makes sense to me to pay off a debt with an 18% interest rate before a debt with a 9% interest rate.

The bottom line is it does not really matter which method you use as long as you are aggressively paying off that debt. Make this a huge priority in your life and it will shave years off your servitude to the financial industry. I have found that the more serious I became regarding this goal the more fun I had. It is fun and sometimes challenging figuring out ways to decrease spending. It is also highly rewarding when you throw those new found dollars that were being wasted at your debt. I smile every time I make a payment on my debt and I sit back and stare at a job well done when my budgeting software line reads “0” after knocking out yet another debt. As I have been doing this for a few years now, I have seen my considerable consumer debts shrink considerably and I am nearing a huge milestone- more on that later.

Any other strategies on how you have paid off your debts? Does anyone else find it highly satisfying to cut their wasteful spending?


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Why Budget

Why Budget Affording Happiness

I love budgeting. If that makes me a bit of a geek or nerd then I proudly accept that title. On the first Saturday of every month, I get up early, sit down at my computer with a tall cup of strong coffee and a smile on my face and I get to work. It was not always this way, but over time I went from dreading budgeting to accepting budgeting to loving budgeting. It would be appropriate to claim that not only is it a hobby of mine, it is one of my favorite hobbies.

When I first started budgeting it was because I recognized that my spending patterns were not aligned with my income, see my previous mistakes. My budgeting days began out of the ashes of the turmoil that was my financial life. I am not a naturally frugal person. It was never important to me to save money and I enjoyed splurging on others and myself. In short, I was a mess. I needed to set a budget as a baby step in the right direction. And I did. It started out simple. I made a word document that outlined my expenses and had lines in which to add my income and do the subtraction along the side. This simple act was eye opening mostly because it was a complete failure at first. Similar in some ways to my first attempt at calorie counting, it was remarkable to see how the little mistakes added up over the course of a month.

I fought through the early disastrous days of the budget, even though I rarely succeeded in staying within my goals. Despite not being perfect, just the act of planning out what I should be spending and keeping track of my actual spending was an invaluable experience for someone with my previous bad behavior. Over time, I began to recognize problem areas, areas that could be improved and areas in which I was actually doing all right. In the earliest days, I visited my budget begrudgingly everyday. Shortly, however it became a weekly routine and now it is a once a month treat.

As time progressed and my experience grew, my behavior began to change. Instead of seeing a way to splurge on a nice meal or other want, I began to look at my expenditures as the source of waste and stress they were. When my spending actually started to reflect the goals set forth in my budget, the debt stopped accumulating. Shortly thereafter the debt started to melt away. Instead of patting myself on the back, I doubled down and set much stricter budgeting goals. This change saw my debt start to dissolve much more quickly. It is at this stage I began to truly enjoy what I was doing.

At this point, I upgraded my budget by purchasing the YNAB software (You Need a Budget). While I admit it is the only software I have tried, it was the only software I needed to try. It has aided me immensely in my budgeting and the tracking of my expenses. I also really enjoy the graphs and reports that allow a visual representation of the changes I have made over time. One of the best features is the phone app which allows my wife to enter her purchases in real time into the YNAB software. This not only makes it easier for me to keep track of all of our spending, it also makes her very aware of every dollar that leaves our lives.

It has become apparent to me over the last several months of financial blog reading that many bloggers do not share my passion for budgeting. It is often derided as unnecessary or the tool of the financially weak willed. I can’t argue with that viewpoint as I began my budgeting as a weak willed consumer. If you are a naturally frugal person you probably don’t need a budget. Even now, however, when I probably could abandon my budgeting because it has allowed me to form new habits, I would not even consider that option. First off, it is fun for me. It is no longer the money “diet” that I relied upon when I was weak, now it is the platform of my financial strategy. I peruse the detailed records of my past spending and enjoy looking for new ways to trim off more waste. Then, with a smile on my face, I tell each and every dollar where to go in order to maximize its usefulness. Of course, as I had accumulated a good deal of consumer debt, most of my dollars went toward paying that off. The joy I received each time I paid off a bit of debt or especially when I finished paying off a credit card for good, far exceeded any momentary pleasure I ever received by racking up that debt. My budget, displayed on the YNAB software, allowed a visualization of that continued progress which served as strong positive reinforcement as I made progress.

Budgeting has been a wonderful tool for my progress. If anyone else is struggling with their spending or could benefit from the joy of telling your money where to go rather than having it slip through your fingers, give it a shot and you may just find that you are as big of a budget nerd as yours truly.

What other software programs have you found success with? Any other stories of budgeting success?


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Take Action

Take Action Affording Happiness

Now that we have examined and owned our mistakes and have a detailed assessment of our current financial situation, it is time to act. If, like myself, you have consumer debt it is time for some radical changes. Check out this great post from Mr. Money Mustache: News Flash: Your Debt is an Emergency!! which is right on and, in typical MMM fashion, highly entertaining to read.

He is absolutely correct whether we accept it or not. Debt needs to be treated as an emergency not as something to live with side by side in some sick parasitic relationship. Your debt is the anchor that is keeping you from reaching your goals, dragging behind you and pulling out your hard earned dollars which then fly magically into the pockets of millionaire bank executives. The same executives which, despite their immense wealth, spend their time figuring out how to pull a few more dollars out of your pockets. I have personally contributed to their fleet of cars and exotic vacations for far too many years at the expense of my own hard work. When I came across MMM’s blog, including the above post, I had begun to pay down my debt but was not treating it as an emergency. In my post-MMM mindset, I have dramatically increased the urgency with which I am approaching my debt and, as he states in his post, it is remarkable how quickly it can melt away when you truly treat it as an emergency.

If you are at a stage where you are still accumulating debt – that needs to end now -not tomorrow, not after lunch, now. Not a single additional purchase, with the exception of that which you need to survive (truly survive not I need a new iphone to survive) is acceptable. Nothing is important enough to voluntarily enter into the servitude of some CEO who could not care less about you as long as you can still breathe and work hard to pay for the private zoo he keeps for when his grandkids visit. The fact that materialism does not even provide happiness (a subject for a future post), makes it even more ridiculous to add years to your servitude in order to embrace yourself in its greedy arms.

If you are at the stage that I am currently, you have seen the light, have stopped accumulating debt and have begun to pay it off. We just need to expedite this as much as possible. The same emergency rules apply. When MMM inspired me to free myself from the shackles of debt, I embraced his message whole heartedly and made many significant changes in order to achieve a goal that should have been obvious long before I read my first financial blog. I slashed my spending in many ways, not only on one-time expenses such as a night out but I have also markedly decreased or eliminated many other unnecessary recurring expenditures. I have not noticed any sense of deprivation, had any less fun or feel any less fulfilled. In fact, I have had several months of enjoyment strategizing and implementing ways to plug the leaky dam that was my budget. It has been a fun and challenging exercise to cut down on waste. Most importantly, of course, is how quickly my debt melted away once I began to be truly conscious of where my money was going.

The rate at which your debt will disappear will of course depend on how much debt you have and your income. A third variable that is much more in your control is how serious you are in cutting your spending in other areas. Every dollar you cut elsewhere is one dollar closer to ending your servitude and when you are cutting from numerous areas, you have numerous dollars in your control. And as I mentioned above, you likely won’t miss that spending.

If you are ahead of me in your progress to financial independence, please comment with your advice and encouragement.

None of these suggestions are truly difficult to understand or implement. The real difficulty for some is the will power to see it through. Unfortunately, there is nothing I can tell you that will magically change your mindset for you. The decision has to come from within. Do you want control over your future or do you want to be working a job you hate when you are 70 years old because you have forked over a huge percent of your life’s earnings to some old rich guy who spent your money buying plastic surgery and fur coats for his 20 something arm candy?


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Assessing the Situation

Assessing the situation affording happiness

Assessing the situation

In order to figure out how to get to your goals, you have to first figure out where you are. To some this seems obvious and they have been keeping track of every penny they have ever earned and know their exact net worth any day of the week. For many of us, however, this is a habit that takes time to develop and seems like a daunting task. It is a necessary task however if your goals include getting a better handle on your finances, or like myself, gaining financial independence.

This may also be a rude awakening for many. It was for me when I first accomplished this task 8 years ago or so. When I sat down to do the math and figured out how in debt I was back then, it was gut wrenching. How had this happened? Why had I done this? If you are doing this for the first time you are likely to have some surprises coming your way and if they are bad you will certainly have an emotional response. Get mad, get sad, place blame (on yourself) and then get over it and get back to work. Don’t let your emotions cloud your mind and prevent you from completing this task.

Emotions aside, it is not a difficult task. All you really need is paper and a pencil and, if you wish to expedite the process, a calculator. Start with your checking accounts and savings accounts if you have them. Write down the balances. Then add in any investment accounts you may have including your IRA, 401K, taxable accounts etc. If you are as big of a train wreck as I was at this stage you may not have too much to add up. Now empty your wallet or purse and add up the cash in there. How much do you have in your change jar or in the couch? Add it all up. Don’t count any IOUs until you actually receive them. Your cousin Jim may or may not pay you that $100 he bowered for concert tickets. Until he does, you do not have that money.

Now take a look at your debts. How much is left on your mortgage if you have one? How much is owed on that car including the interest you will pay over the life of the loan if you can’t pay it off early? How much credit card debt do you have? How much do you owe other people? I recommend counting any personal IOUs because as an honorable person you would never consider breaking your word. Write these all down and include any debt or resource that I have not mentioned that you can think of.

Subtract the debts from the positive account balance and you have a good idea of your net worth, or depending on how exact you are, your exact net worth. Any surprises? If you had to guess what this number would have been before you calculated it, how far off would you have been? I was way off. I had accumulated much more debt than I realized, but as it was spread among different accounts it was easier to ignore.

Now you have a starting point – a point from which to guide your decisions on how you are going to accomplish your goals. You may have just found out how far you are from your goals and will feel discouraged. Or maybe you are in much better shape than your realized! Wouldn’t that be great! If you, like myself, found yourself in a bad financial situation, you have some choices ahead. Are you going to own this problem and overcome it, or are you going to stick your head in the sand, continue to spiral downward and work for the credit card companies until you die?

I chose the path toward freedom, made some changes in my life, and am now on the right track. I have not reached my goals, but they are getting closer not further away. Some of the choices I have had to make seemed difficult or at times like a sacrifice, but looking back I do not regret a single one and doubt I ever will. I will write some more details about those changes in future posts.


Where you surprised when you did the math?

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Own it

Own it Affording Happiness

Take control of your financial life.

The first step that helped me get my financial compass pointed toward success was acknowledging and owning my mistakes and even some mistakes of others. It is extremely easy to fall into the role of victim. Student loans are killing me and I can’t get ahead. My car broke down and I had to put the repairs on credit. My furnace needed replaced and I had to get a payday loan. Those damn Wall Street sorts are taking advantage of us. The government is taking all of my money so I can’t save. While some of the above may be applicable to your situation, if you sit around and whine about them you are never going to change your situation. The game of life, with its sometimes-unfair rules, is more or less set and it is up to you how successfully you are going to play.

Own your mistakes. Own the concept that you are not perfect and never will be perfect. While you are at it, own the mistakes others have made that have contributed to your situation as more than likely you are going to be the one who has to remedy the mistakes regardless of who made them. Own the fact that it is your responsibility to educate yourself, make difficult changes and go through some growing pains if you are going to make progress. Until you realize that no one else is going to do it for you, or that the issues will somehow magically disappear, you will never escape the role of the victim and will likely not make much progress.

When I finally decided to own my mistakes, it was an unexpectedly freeing experience. The nebulous cloud of past mistakes consolidated down to a solid list of concrete examples of areas to improve upon. The feelings of embarrassment and shame I felt for having been so stupid in the past, slowly changed to an exciting personal challenge into which I can dive with the full force of my enthusiasm. One of my personal strengths, and I think of humans in general, is the ability to thrive when challenged. We are amazing creatures with great capacity to thrive when motivated. If you don’t own your mistakes, however, you don’t even know who or what you fighting. This leads to woe is me disease and the role of the victim.

Once you recognize where you have made mistakes, you can begin to outline how you are going to change going forward. As a younger man, I was too happy to pass along my lifestyle debt to my current self. I incorrectly correlated expensive meals and outings with increased happiness when if fact it was the company that mattered most. Perhaps my biggest weakness, was my ignorance of personal finance. Worse yet was that I did not even realize how ignorant I was. I was ignorant of my ignorance. Coming to grips with these issues has shown me the path forward. As mentioned in my previous financial and lifestyle goals, I have set clear challenges to go forward and remedy these issues. And that is what I am going to do because I own my mistakes and it is my responsibility to fix them.

If you find yourself in a similar situation and need to make financial progress but don’t know where to start, I challenge you to sit down in a quite area where you will not be disturbed and contemplate what factors have contributed to your current situation. Write them down and be brutally honest with yourself. You don’t even have to figure out how you are going to fix them yet, just acknowledge the areas in which improvement is needed. It will probably only take a half hour or so depending on how detailed or broad you decide to be, but that could be the first step to a much brighter future.

What is on your list?


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