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For the past year, I have been working out at a local boot camp program. I typically try to attend four times a week. While I am definitely in much better shape, I’m not where I want to be. Admittedly, there are times that I’m incredibly frustrated by my [lack of] progress.
Here I am, working out, varying up my workouts between strength and cardio, trying to eat healthy and sleep well. I’m sweating up a storm at these sessions and sacrificing time that I could be lazily sitting at home watching TV. I thought I would undergo a body transformation as a result of attending this bootcamp. However, there is still no six-pack to be seen.
It probably also doesn’t help that I cheat quite a bit in the diet arena. I eat sweets more often than I should. Did I mention that Mrs. MSM is a fantastic baker? It’s hard to turn down her delicious treats, especially when she has some leftovers when she bakes for a friend.
Sure, I’ve lost some weight. My clothes fit better, and I do feel better. But I expected that I would have a beach body by now. You know, the ones you see on TV on those infomercials for whatever miracle diet or workout plan that is being promoted. Yes, I realize I may have had some unreasonable expectations.
What does this have to do with finances?
In all the years that I have discussed finances with peers, we always seem to end up at the realization that expectations sometimes need to be reset. So many people with $0 in savings expect to be able to buy a home, have a fully-funded retirement account, retire in five years, and live happily ever after.
We live in an instant gratification society. So, I’m not surprised when I meet someone who is shocked to hear how much time and effort is required to meet the aforementioned financial goals.
As I shared in How Fast It Takes to Make a Million Dollars, it may astound some to learn how long it really does take to accumulate $1 million. When I first started my financial journey in my early 20s, I thought I did everything right. I contributed to my 401(k) match. I maxed out my IRA. With laser-focus, I saved up enough for a downpayment for my house. However, I also spent more than I should have along the way.
It wasn’t until I hit my 30s when I really reflected upon my financial situation. I considered where I was and wondered why I wasn’t further along. Sure, contributing up to the match and maxing out your IRA will help out tremendously. However, it won’t accelerate you nearly as quickly as when you start cutting your expenses to the bone and looking for opportunities to save wherever you can.
I didn’t fully grasp my financial situation until I started to understand the concepts of denial vs. delusion. That helped me to really understand what was going on.
So let’s first break these concepts down.
Denial is when you see a problem but choose not do anything about it. Maybe there is a stack of bills that are piling up around you. If you do nothing about them, you might deny that you truly have a debt problem. In essence, it is just ignoring the problem and its existence.
While denial is bad, delusion can be even worse.
Delusion, according to Psychology Today, is when you create an “alternate path”, which allows you to continue making poor decisions. Those decisions could be justifying spending more money, even though the mortgage payment is tight each month. You figure that if you earned a bonus last month, you can somehow earn another one just as easy to make up for these spending mistakes.
I’ve met far too many people who are delusional with their finances. They figure they can eventually go on a financial crash diet, and everything will be fine. As most of us know, however, that’s not usually how it works. Diets are hard to sustain. Usually in a month’s time, we are back to the bad habits all over again.
The way I explain it is: If it took you years to climb into debt, depending on how much damage has been done, it may take years to climb back out.
That’s why my course Reaching FIRE is so helpful. If you follow the 12 Pillars, you’ll see that by setting smaller, attainable goals, you are that much more likely to succeed in your financial journey.
I think Pablo Picasso said it best:
“Our goals can only be reached through a vehicle of a plan, in which we must fervently believe, and upon which we must vigorously act. There is no other route to success.”
Couples and Money
When I talk finances with couples, I stress that they need to create a budget together. Most of the time, one spouse will allow the other to handle all of the finances.
To me, that passive spouse is being completely delusional. How can you be sure that your spouse is making great decisions at all times? I hate hearing that one spouse is totally uninvolved with their family’s finances.
What happens if your spouse dies unexpectedly? Would you know how to pick up the finances after that?
While one spouse may be better at handling the finances, the other needs to understand the situation at a minimum. As an example, my mother-in-law had always handled all things finance in her household. When she passed away, it took months to figure everything out. It would have been much easier if one other person in the family had been at least knowledgeable about the financials.
Ignorance Is Not Really Bliss
It may be tempting to stick your head in the sand and hope things will turn out alright. But that usually comes with a price. The price could be additional time, money, or worse, friction that could lead to marital strife.
Start the year off right: get on the same page as your spouse or significant other. If you haven’t taken a finance class, take one. Gain knowledge. Don’t let another year go by unsure of your financial situation. Make the change today.