Have you ever walked into a messy room or your garage and said, “I don’t even know where to start!” It happens to all of us. At that moment, we all have different reactions. Some walk away and put it off until later, others dive in and start. When things feel overwhelming, you may hear the cliché, “It’s like eating an elephant, take it one step at a time.” Unfortunately, or fortunately, I’ve never eaten an elephant so I’m not sure if that works.
What does work is establishing a strategy or plan and being methodical about your attack. Building a plan gives you insight into the series of steps that must happen to get the garage cleaned. Then you can allocate time to executing each step.
This same approach holds true in personal finance. I frequently meet people that are overwhelmed with their financial challenges. Student loans, credit card debt, house undervalued, retirement, etc…the list goes on. More often than not, they do nothing. The enormity of the situation brings them to a screeching halt. They would rather eat an elephant than deal with the problem. If you’re in this situation, I would suggest the following:
- Take a breath.
- Find a strategy. Notice I didn’t say build one. There are plenty of books, seminars, etc. that will give you the strategy and the steps. Find one that fits you and your goals. No point in reinventing the wheel. If you need somewhere to start, check out the 7-Tank System.
- Define 1 month goals that are aligned with the first step of whatever strategy you selected.
- Achieve those goals.
- Define another month.
- Continue for the first 6 months.
Notice I have not suggested figuring out your long term goals. It sounds counterintuitive but, in reality, that conversation can be never ending. Instead, build momentum in the first 6 months and allow your long-term goals to evolve. If you don’t know what you’re capable of achieving in the short run, it’s hard to set realistic goals over the long term. If you find out that you can only save $10/month, becoming a millionaire will be difficult. Alternatively, if you realize that you can save $500/month, the $20,000 of debt is manageable. Perspective is critical. And, in personal finance, having a realistic perspective of what you can do is invaluable.