Develop a Mission for Your Money

I’ve always been interested in money. It’s been a fascinating subject throughout my life so far. I can remember being just a few years old and finding its appeal because it was shiny. I wondered why people wanted it and why some people had things that others didn’t. As I grew up into my early teens, my parents decided to aggressively tackle their debt, which was absolutely fascinating to me about how their mindsets changed. When I got out of my parents’ house and out on my own, I started to realize the true power of money.

Money decided where you lived, what you ate, where you went to school, and so much more.

Going to college was interesting because “someone somewhere” decided that it was a decent idea to loan me lots and lots of money so I could go to school. Whoever “they” were decided that it was worth “it” to say yes to my request for money after I filled out some paperwork with some of my information and my parents’ information when applying to school. It wasn’t until later that I realized what “it” was and “it” happened to be this funny little thing called interest.

Fast forward a few years and I’m out of college and in the working world. Upon my entry into the working world, I now have to pay back those student loans. I went to college and it cost around $125k, and that sneaky little thing called interest now made a very important difference. Instead of just paying $125k and that ending that, I had to pay more when I calculated it all up. Sending them a check for $1,000/month for 10.5 years didn’t satisfy the loan. Instead, it would take about 15 years of payments to satisfy that loan.

Whoever made that agreement for my loan was smart and had a plan for their money. Their plan for their money was to lend it to others in return for those people to give the lender back more than they were originally given. I felt like someone had set me up because I didn’t really, truly understand what I was getting myself into by taking on such large student loans. I started to take stock of my finances at that time and also had gotten a credit card in college, and that had an even higher interest rate! That company also had a mission for their money, but on a different arrangement. Sure, they didn’t loan me nearly as much, but they did jack up the interest rate so I had to pay them more back relative to what I initially got from them.

I suddenly felt very young and naive, and I was pissed. I felt like people were taking my lunch money. I realized that I needed to do something about this, so I quickly paid off the credit card.

That was a relatively quick process which took about 6 months. But these student loans were HUGE relative to what I was making. I couldn’t imagine paying them off anytime soon, so I gave up. I became content with making the regular payments on time each month.

Fast forward to my 30th birthday. I take stock of my finances. I’ve paid down about 2/3rds of my student loans. I’ve got some money in retirement accounts, but not enough according to those internet articles I’ve been reading. I’m looking around at some of these articles that those personal finance bloggers have written about saving 10%, 20%, 30%, 50%, or some as even as high as 75% and 90% of their income. HOW THE HELL ARE THEY DOING THAT?

They all said the same thing. Live below your means. Stop eating out. Cut your cable bill. Put enough in your 401K to max out your employer match. Max out your IRA. Now, max out your 401K. Save for Christmas. Save for your child’s college fund. Save for your bar-mitzvah. Save, save, save!

What they hell are they saving for? Those things are WAY OFF IN THE FUTURE! I was probably going to die before my children go to college or I even need my retirement accounts because I’m so stressed out about money. Here I am, wondering what’s missing because I don’t get it. I can get saving for Christmas each year, so I decided to do that and at least not put Christmas on a credit card.

I could focus on paying off my debt, but what then? What do I do when I no longer have a driver that’s helping me direct my finances?

It wasn’t until I came across an innocuous article about living for free by house-hacking that I started to see the game around me happening with money. That’s when I started to think about saving more money because other people were going to pay for my house. I started to see how landlords very sneakily actually made themselves better off by dealing with my broken toilet, because they bought the house and I was paying for it! I started to get the bigger picture.

At this point, I’m finally starting to connect the dots. I finally realize that I have to have a mission for my money. Just like a military, that mission will change over time. What I’m focusing on today is not what I’ll focus on tomorrow.

Once this epiphany hit, I realized that, at every stage of life, we have to have a mission for our money. We have to have a reason that focuses what we spend our time and money on. We need a driver that’s going to steer our money, effort, time, and energy in the right path towards our goals whatever they may be. We nee a path that’s actually going to get us further ahead.

That path might have some really hard steps. It might involve some really uncomfortable situations. It might mean we have to stop hanging out with certain people and break off certain friendships. We have to be willing to accept that putting ourselves first is more important than the fleeting happiness of another night at the bar.

Having this insight, it became vastly easier to say no to things that didn’t fit my current and future missions. I could say no to a happy hour with coworkers without guilt because it was not in alignment with my mission. Things that I would agonize over for weeks or months became very simple decisions that took less than a second to make. I now had a reason for my money and a way to advance that cause.

When I started to align my actions with my mission, I found that I stopped spending so much money. I found that I had A LOT of money coming in each month that I was spending on stupid, frivolous shit. There were too many nights eating out, too many video games that I had bought, and too many times I said yes to alcohol at the bar just to impress someone I didn’t give a shit about. I didn’t have to “find” the money to make my mission happen because I was already making enough. I just had to align my spending with my mission.

In the beginning of your journey, your mission might be getting a handle on your finances and just knowing what you are spending your money on. It might evolve into creating a budget and adjusting your lifestyle so you spend less than you make. Then it might advance that mission to paying off debt. Once you’ve gotten there, accruing a six-month emergency fund might become the mission. Maybe it’s then maxing out your retirement accounts every year and building a college fund for your children. Maybe it’s saving up so you can take a year off and pursue that business idea. Maybe it’s setting aside enough money so you can travel out of the country every year. Maybe it’s saving up to buy your dream car.

Whatever stage you are at, you need to know how your current day-to-day activities build up so you can accomplish your mission. You might decide to take a little longer when you are tackling a certain phase, but you can do your best not to deviate from the path.

Here’s what my missions have looked like in the past, present, and potentially in the future:

1. Know what I’m spending my money on. (DONE)
2. Spend less than I earn. (DONE)
3. Get a better job so I earn more. (DONE)
4. Pay off debt. (my current goal)
5. Build a six-month emergency fund.
6. Accrue a down payment to buy my first multi-unit rental property so I can house-hack.
7. Max out my retirement accounts and contributions.
8. Within two years, save up a down payment to buy another multi-unit rental and repeat every two years until I can replace my full-time income.

What does your mission look like today? What’s helping you push yourself further along? What are you focusing on today to push you through to tomorrow?