Before being introduced to Joe and Vicki’s approach, I had always thought of budgeting as accounting, pure and simple. You know, like balancing your checkbook. Maybe nothing more. (You do that, right? Have you ever been surprised to learn that some friends or coworkers don’t? How do they survive? Well, I can tell a few stories of friends who woke up with rude surprises.)
The idea of saving more than I earned was always built into my mindset, but not always my reality. And my impression of the kind of penny-pinching examination Joe and Vicki were advancing seemed to fit people who were trying to dig out from a deep hole — the kind that might have them losing their car and home or filing for bankruptcy. That wasn’t me.
Budgeting like that could be pretty drastic, right?
But that little plus sign — + — Joe and Vicki allowed you to put under expenses where spending more would give you more pleasure carried a positive message. It hinted at dreams. By spending less on other items, you could direct more toward what you found more life-enhancing. What they offered was definitely different.
Quite simply, once you’ve determined where your income is going, you can begin to decide where you really want it to go. Here, your reflections on personal values sharpen your thinking. The more focused your life, the more likely your success in fulfilling your ambitions. That part really appealed to me.
Maybe you’ve wanted to start your own business but need to build equity first. Or you’d like to go back to school and finish that degree. Or maybe you’ve always wanted to travel but just couldn’t manage. Joe and Vicki were giving you a key to achieve this. You set an annual goal — or even one five years down the pike and set milestones to get there.
But then Joe and Vicki raised the horizon on the big goal. They called for life-mission goals that your budgeting would advance.
Their original premise had people work intensely for five years and then essentially retire, living on the dividends from their nest-egg investment. The underlying conditions for that plan have changed dramatically, but it was a fascinating concept.
My life goal had been to have time to concentrate more fully on my writing. A few years before engaging in these exercises, I had an unanticipated opportunity to give myself a sabbatical — a year free of daily employment — and it had been extremely productive and psychologically renewing for me. What I drafted in that period gave me the foundation for what I would revise over the next three decades, leading to six of my seven novels now available as ebooks at Smashwords.com. The conventional reasoning would have demanded jumping straight ahead into a new job and investing the savings in a condo or an Investment Retirement Account or the like rather than holing up in an apartment.
Do I have any regrets? My retirement would have been much more financially secure, yes, but the once-in-a-lifetime opportunity of catching the experiences on paper when I did definitely lifted a burden from my soul. I’ll leave the rest of this for writers’ conferences, should you be interested.
Could their plan really allow me to do this for the rest of my life? I was dubious. My income barely covered the basics, and there was only one of me, not two. Besides, I’m sure they had more lucrative careers.
When I first sat down to run the calculations, I was skeptical. I was barely scraping by as it was, and the amount to set aside was nearly my entire income over the five-year period. As the numbers came together, though, I discovered the goal was not nearly as impossible as I’d originally deemed. By working one overtime shift each week, taking in a housemate, getting by without an automobile, reducing my spending to a bare minimum, and investing my savings shrewdly, it could be done. At least I lived close enough to work, I could walk the three miles each way. And I’m guessing that I assumed the housemate would have wheels to make the grocery runs and the like. This was truly shocking.
As you will find, “running the numbers” on a five-year plan like this is eye-opening.
What would your big goal be? Your big dream?