“Discipline is the bridge between goals and achievement”
– Jim Rohn
Short-Term Goals
If you’re on the path to FI you likely are a long-term thinker. Delayed gratification makes sense and you see the power it affords you. While long-term thinking is important, it should not limit progress.
In the context of Finance, you may have heard of the debt snowball or debt avalanche. I think this comes down to setting short-term goals and getting the dopamine hit of achieving those goals to leverage future success.
Mathematically, the debt avalanche (tackling the debts with the highest interest rate first regardless of balance) is the best method. However, the debt snowball (tackling the debts with the lowest balance) first can be hugely beneficial because it allows you to tackle a short-term goal and achieve some immediate success. We know that money is emotional.
The same paradigm plays out when we talk about the age-old question to pay off your mortgage early or to invest that same money in the market for a higher return. My goal today is not to talk about these though.
Analysis
Instead, I’d like to build on the Why of FI and look to see how we move closer to our mission of Financial Independence.
As I spoke about in the 5 levels of FI, once you set your sights on which lever you intend to pull then you can start to reverse engineer what your next step needs to be. Personally, I intend to follow the practice of traditional financial independence (25x annual expenses).
A couple of months ago, as part of my local ChooseFI chapter, I took part in the practice sweeping the country lately, leading a case study. The template lays out who you are, how you got to where you are today, where you are (financially speaking), and then Q&A both for the presenter and the audience.
Taking action
Leading up to the presentation, I felt like I had tracked our expenses fairly diligently. However, what dawned on me was I wasn’t seeing the forest through the trees. I could tell you what my monthly raw savings amount was, our monthly percentage saved, etc. but I couldn’t tell you how many years until I’d be able to pull the trigger.
More importantly, I could tell you broadly that I was working on not having to go to paid employment, but beyond spending time with my family and friends I didn’t really have a concrete next step.
Life after FI
One of my favorite podcasts of late, MileHighFI, with Carl Jensen and Doug Cunnington have a great question that I think we all need to ponder. What does your perfect day look like?
I thought about this and came up with a few items such as exercising, spending time with my family, eating good food, and doing something mentally challenging. To help progress on these items, I’ve worked on creating short-term goals to make progress and experiment.
The important thing is perfection is not the object, but progress. I’ll ask you; what are you progressing on?
Leave a comment below and let’s make some progress together.