Focusing on a big goal makes a big difference

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.

Just think.

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 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?


That price tag gets personal

Comparing the price of an item or service against my working hours definitely transformed my relationship to money. That price was no longer an abstract figure, vaguely set as a proportion of my income. No, it was now personal. I was asking myself if I’d rather be out of the office than have this.

Think of a really hard day, if you need to. Are you enduring this just to have that?

As much as I found my job generally engaging and serving a public good, there were many nights and weekends I would have loved to have been elsewhere. A birthday party or a play or concert, for instance. You get the picture.

What’s your reaction when you compare the cost of an item or service against the amount of time you worked to pay for it?

Would that perspective change your decision to buy?

Using the clock as a measure of value  

This approach soon had me realizing that money is about a lot more than dollars and cents. It’s about possessions and wealth, for certain, and self-identity, even dreams, relationships, and community.

Your labor and your time are particularly crucial considerations relating to money.

It’s easy enough to figure out what you’re paid by the hour. Or, if you’re on a salary, to divide a week’s income by the number of hours you’ve worked.

But that’s not a true figure. Joe and Vicki would have you factor in the hours you spend commuting, plus fuel and related transportation expenses. Add to that clothing, if you have to dress a certain way, and even your hair styled or other grooming.

Add it all up and you may realize that a higher-paying job can cost more in the end than the old one.

Joe and Vicki then use time as a means to evaluate a given purchase. How long did I have to work to earn what this item or service costs?

That is, money is no longer an abstract figure on the bill. It represents time you’re exchanging. And, as they say, there’s only so much time in a day.

No wonder Jo and Vicki called their book Your Money or Your Life.

Try this as you go through the week. How much of your working time are you spending on groceries? How much on a cup of coffee? Or gasoline? Or that big dinner out?

It’s time to count your clams

If you’ve been using the tiny spiral notebook I suggested to record all of your expenditures, down to the penny, you’re getting a good picture of where your cash goes: vending machines, coffee, parking meters, breath mints … the whole shebang. Pull out your checkbook and your credit card statements, along with any automatic deductions from your paycheck or checking account, put all the figures together with your notebook’s, and you’ll have a decent snapshot of where it’s going, going, gone.

(And what’s a major credit card, you ask? Any one that most stores accept, naturally.)

As you tally how some of those little items become expensive over time, you may well need to apply the emotion-related insights you now possess — to say nothing of a moment or two for prayer. Remember, each of these is the result of a decision.

I’ve usually had a pretty clear picture of where my change was going and am quite aware how easily we can be “nickel and dimed” out of our cash. Still, seeing it all at once can come as a shock.

Up to this point, we’ve been learning to speak more openly about our experiences with money. But now we’re turning to some essentially private work, done in several stages. This is where the action really begins. As you get your act together, it’s also where the fun really begins. Seriously. It’s where those earlier considerations come down to the bottom line. It’s the recipe where all of our ingredients become a dinner or a dessert. It’s where we get ahead of the bills.

It’s what’s usually called budgeting, though holistic CPA Lu likes to give it a more positive spin, referring to it as a Spending Plan. Either way, the gold-standard guideline for this is set up in Your Money or Your Life by Joe Dominguez and Vicki Robin, for reasons I’ll discuss shortly.

Usually, when we think of budgeting, it’s along the lines of dieting. What do I have to give up to lose weight or reduce expenses?

Joe and Vicki have a nifty series of steps around this. They have us look at each purchase and then ask about our satisfaction level with it. Can we get as much pleasure by spending less on that item (buying a less expensive bottle of wine, for instance) or, if we spent more, would our enjoyment rise correspondingly? They also introduce a concept they call “gazingus pins” — pet expenditures we indulge in, for our own pleasure; we’ll look at these and other “toys for adults” in a bit.

Taking your snapshot, break out your monthly spending by categories — housing, utilities, transportation, food, clothing, and so on. Within each one, what is essential and what is discretionary? (In my old yoga circles, this was seen as “needs” versus “desires.”) In their system, you then make a plus sign or minus sign for each item to indicate ways to adjust your spending level. Yes, you’re allowed to say you want to spend more on something. This doesn’t sound like dieting, does it?

You then match this against your monthly income. The goal, if you’re interested in financial independence, is to increase the amount you’re saving.

There are two ways to do this. One is to increase your income. The other is to reduce your spending.

Their book contains a nuts-and-bolts approach to budgeting and planning — or, as they put it, to achieving the American Dream on a shoestring — and you really should take a look at it. Other spreadsheets are available — feel free to tell us of ones you’ve found helpful or of ways you’ve tweaked Joe and Vicki’s.

As you look at your spending, what items surprise you? Are any out of line with your expectations?

While that deadline is still looming, take a deep breath

Don’t tell me it’s not emotional. A few more tax deadline questions, while the issue’s still on your mind.

Do you file your returns early? Or do you wait till the last minute? Is there a reason for your timing?

Do you file online? Or with a trip to the post office?

Do your tax dollars fund services or activities you find morally offensive?

Have you ever openly refused to pay a portion of your taxes? Do you know someone who has?

Are you afraid of an IRS audit? Prepared? Relying on yourself? Or a tax accountant?

Tax-time travails on the money path

Of course, one big time when we feel the weight of accountability comes with a deadline attached each year: April 15. It’s also a good place for us to observe just how close the interplay of our emotions and values can be.

Most Americans face some degree of anxiety around tax time. It is to be expected; the system is set up and operated in a way that is intended to instill a degree of fear. Filing an income tax return is a mandatory citizen responsibility. We’re expected to deal with incredibly complex rules. There’s even an “honor system” to report our income and pay our taxes, although there are stiff penalties if we don’t and are then caught.

Fear, loathing, and distrust are widespread. Some people worry about being audited, doing it wrong, or unexpectedly being ordered to pay a lot more taxes. Others fret over having their return done on time and insist it be absolutely correct. Some are far more willing to take risks, while others willing overpay in the hopes of being “audit proof.” Others can’t sleep at night if they think the Internal Revenue Service is getting one penny more than it must. They obsess over finding every possible deduction. And then there are all kinds of stories to back up those claimed deductions.

Lu, our holistic accountant, had a wealth of examples regarding tax phobias and obsessions — the ones that can result in the April 15 deadline coming and going without the tax return being filed. Her advice: “Here, you might do well to go ahead and file the tax return on time, even though you believe it is not absolutely perfect. Later, when you discover the extra deduction or special rule, it will be relatively easy to file an amended return to correct it. By the way, filing an amended return does not mean you will be automatically audited. Although each amended return is processed manually, by a human being, we have never seen an audit of the whole return result from filing such a correction.”

The important thing, then, is to avoid being jammed by your values and emotions. When you can openly discuss these, you’ll discover you’re not alone. A lot of your friends have big tax secrets, too, and they are eating a hole in their stomachs. Try talking about it, laughing about it. It appears to be part of the human condition. Go easy on yourself. The April 15 deadline is not really as ominous as you make it out to be! If your return isn’t filed on time, it may just cost you a little more when you finally get it in.

How do you feel about paying taxes? Do you think you pay too much? Not enough?

Do you feel you get your value’s worth?

Name three public services you value highly. Name three you think are wastes of money.