dreams

14 “Impossible” Money Goals That Aren’t

January 21, 2014 By Jennifer Derrick 3 Comments

Whenever you bring up a large or extreme financial/frugal goal (particularly if you bring it up at a party populated by spendy people, as I once did and will never do again), the first response is often a dismissive snort and, “That’s impossible.” And if you dare to say that you’ve already achieved said, “Impossible” goal, the response is likely to be, “Well, you’re exaggerating or outright lying because no one can really do that.”

Okay. I understand that many large or extreme goals seem out of reach. Mostly, though, what’s limiting the naysayers is their own belief that such a thing is impossible. (And their behavior, but I’ll get to that in a minute.) The first step in achieving the impossible is to want this impossible thing more than anything else. The second step is to believe that you can achieve the impossible. The third step is to behave in such a way that you make the impossible possible.

Sure, it’ll take work and sacrifice. Anything worthwhile usually does. It won’t be easy. If it were easy, no one would think of it as impossible, right? You have to match your actions to the goal. (This is where the behavior I mentioned above comes into play.) If you say you want to retire early, you have to behave in ways that make that possible. That means spending very little money today so you can sock every extra cent away. Either that or you have to earn so much that you can still spend freely while saving a ton of money. Either way, your behavior has to match the goal.

Here are some money-related things that people commonly dismiss as impossible but which are more than possible if you work at them. No, you might not be able to do everything on this list, and you probably can’t achieve all of them at once, but you can probably manage one or two with careful planning and work.

Early Retirement

I essentially “retired” from work several years ago in my late thirties. I still work, but I only take the jobs I want to do because I’ve saved enough that I don’t “have” to work. People all told me that retiring so early was impossible, but it wasn’t. I saved aggressively, beginning with my first job. And I’ve always kept my expenses low. I don’t buy stuff I don’t need and I get the best possible price on the items I do need. Contrary to popular belief, I don’t live a deprived life. I have plenty of entertainment, clothes, and food and I’m not so extreme that I’m not using toilet paper. I simply realized early on that the forced treadmill of working until I died was not something I wanted and I did everything I could to make certain I wouldn’t have to.

Comfortable Retirement

Even if you don’t retire early, many people think that retiring at all and being able to eat anything but dog food are pipe dreams. Again, retiring comfortably is possible, but you have to prioritize it over other things. You have to start saving early in your working years (to take advantage of compounding) and keep saving the whole way to retirement. Too many people put it off until the kids are gone, the house is paid off, or some other excuse and then there is no way to catch up. It’s too late.

Fully Funded Emergency Fund

While there is a difference of opinion about what constitutes a “fully funded” emergency fund (some advisors say three months of expenses while others push it up to a year), many people feel like putting that much away is impossible. It’s particularly “impossible” if you’re saving for retirement and other goals, as well. But an emergency fund isn’t built in one day. You build it slowly, putting in the $20 you saved by not eating out one day, or the $5 rebate check you received from your cereal purchase. And if you can bank a big amount, like a tax refund, you’re well on your way. Ideally you want to save more, but the big goal is achieved by consistently putting money in the bank (and then not raiding the fund for anything other than a true emergency).

Change Someone Else’s Life

Wouldn’t it be great if you could give someone enough money to change their life? Whether you give to a family member, through a charity, or set up a scholarship at your alma matter, it is possible to save enough to make an impact on someone else’s life. Ideally you’d like to do it while you’re alive to see the joy, but that may not happen. Instead, you can strive to save enough that you make a bequest in your will. And you might be surprised by the amount of money that people consider “life changing.” While $10,000 might not seem like much in terms of what the truly wealthy can give, you’d be surprised at the difference it can make in an impoverished country, or even to a student who can’t even dream of college without scholarships.

Self-Insure

Some people dream of being able to kick their insurers to the curb. To do this, you have to have enough money saved to cover any damage or loss to your property, or any illnesses that you may have. (And you should still carry liability insurance to cover you against lawsuits. Your state will likely require it on your car.) And you must also own those items free and clear since lenders will require insurance to protect their investments. Even if you can’t fully self-insure, it’s possible to save enough that you need only carry catastrophic insurance. You’ll pay for the minor stuff and only rely on the insurer for significant losses. (Self- insurance isn’t a dream I’ve ever had, but I have a neighbor who has achieved it on his home. He paid it off and then dropped all but liability insurance. He has enough saved to pay for a new home and contents and cannot see paying the insurer any longer. He continues to save what he would be paying in insurance premiums, further growing his savings.)

Live a Minimalist Existence

While this one doesn’t require saving or earning huge chunks of money, many people still feel that it’s impossible. Whether it’s a tiny house or simply owning a finite number of things, many people swear that it’s impossible to even downsize, let alone live a minimalist existence. The trick is to separate your value as a person from the stuff that you own or the square footage of your home. Too many people confuse “success” and “worth” with big houses and lots of stuff. If you can be comfortable in your own skin, lose your attachment to stuff, and stop caring what others think of you, you can easily live a minimalist existence. All you have to do is donate your stuff to a worthy charity, toss the trash, and then refuse to bring anything else unnecessary into your home.

Start a Business

Starting a business doesn’t always require tons of money. There are lots of businesses that can be started for very little money. What is required is discipline, a salable product or service, and commitment to making the business work. You have to be willing to put in the hours, listen to feedback, and learn what you don’t know about taxes, accounting, insurance, etc. Very few people start a business knowing everything and having everything in place, but they are willing to go out and try.

Extensive Travel

Like starting a business, travel does not always require lots of money. Luxury travel requires money, but there are plenty of other types of travel that you can engage in that cost much less. We travel many weeks out of the year, but much of it is camping in our RV or visiting destinations out of season. While luxury travel is nice, I’d much rather take more trips for less money than one big expensive trip.

Move to the Country (or the city, the mountains, or another country)

Many people dream of moving somewhere else. They want to make their dreams of a certain lifestyle come true. But many feel stuck where they are because moving can require a lot of money. Besides saving like mad to make the dream come true, you should also ask whether your dreams need readjusting. Can you downsize significantly so that you require a smaller space, which would be more affordable? Can you be happy in your second choice location if it is significantly less expensive? Sure, it would be great to be able to afford the big dream, but maybe you can be happy with a bit less if the location is what’s most important.

Pay Cash for a Car (or house, boat, or RV)

As with many others on this list, these are goals that you must prioritize and save for. But as with the others, there are compromises you can make. If you buy good used cars, they will cost much less than new. Same with “toys” like RV’s, boats, and ATV’s. If you start saving for the replacement immediately after buying the current car, and you drive it for years, paying cash is more than possible. As for houses, you’ll probably have to mortgage your first, but if you pay it off quickly and then use your equity to buy the next house (with maybe a smaller amount in cash added on), you’l have accomplished the impossible. This won’t work if you buy houses that are significantly more expensive each time, but it can work for comparably priced homes and, if you downsize, you may even pocket some money.

Pay Cash for College

Whether you’re a student seeking to avoid college debt, or a parent seeking to pay for your kid’s college in cash, it is possible to pay cash for college. If you’re a parent, college has to be a savings goal and you have to start as soon as (if not before) you have kids. And you have to set limits. If you’re willing to save and pay $60,000 for college, for example, but your kid wants to go to a school where that won’t cover it, you have to tell them to cover the difference. If you’re a student, you have to be willing to work hard, attend state schools, and chase every available scholarship, all while cutting expenses. However, people do manage to pay cash for college every day. It’s not as impossible as it seems. It simply requires a readjustment of expectations and a solid work and savings ethic.

Live Well on Less than $20,000 (or even less) Per Year

Many people swear that it’s impossible to live well on a tiny income. What makes this “impossible” is usually the definition of the word “well.” When most people think of living well, they think of large houses, nice cars, and other creature comforts. But living well can also mean simply having a decent roof over your head in a safe neighborhood, adequate food to eat, a little entertainment, and decent clothes. That is more than possible on a small income if you are creative and willing to work a bit. Buying things secondhand, growing some of your own food, choosing free entertainment, and relying on mass transit are great ways to reduce expenses. You may also have to move to a lower cost of living area, take in some roommates, or otherwise get creative to reduce your expenses. It’s not impossible to live well on a small income, but it requires that you adjust your lifestyle and expectations. You’ll have to learn to do without things like cable TV or cell phones that other people consider “essential.”

Live without a Car

Americans love their cars and most consider life without one to be impossible. In some areas of the country this is true. Mass transit is sadly lacking in many areas. But if you live in an area with mass transit, or within walking/biking distance to most of the places you need to go, you can live without a car. You may be able to carpool or participate in car sharing programs. You can rent a car if you need to travel long distance, and some metropolitan areas have cars that you can rent by the hour if you just need to run a couple of errands. If you don’t live in an area that’s friendly to the carless and going without a car is important to you, you may need to look at moving.

Have One Spouse Stay Home

Having one spouse stay home requires, like so many other things on this list, a disciplined savings and budgeting strategy. If you want to go from one income to two, you have to plan for it. Try living on one income before you give up the second one. Save aggressively even before you have children. If you think you will require more money than one income can provide, have the stay at home spouse look for work that can be done from home. You’ll likely have to cut expenses, as well, but not paying for commuting expenses, lunches out, and employment taxes will help with this. It’s not impossible for many people to live on one income, but it may require that you learn to live with less and let go of some things like cable TV, newer cars, and meals out.

If you want to accomplish the impossible, you need to plan and prioritize in order to make it a reality. You can’t go at it half-assed, or simply hope that things will fall into place. You have to know how much you need, how much you can save, and constantly evaluate your finances to make certain you’re on track to meet your goal.

Have the Courage to Envision a Different Life

June 5, 2013 By Jennifer Derrick 5 Comments

I’ve met many people over the years who, when talk turns to making changes that would save them money and/or give them more freedom, start in with “I can’t” and “I won’t” without ever giving any serious consideration to the ideas being discussed. They never step out of their own way long enough to ask, “What if?” they just stick to their narrow view of life as they know it and never dare to imagine that things could be different.

For example, one day my friends and I were discussing moving to a different area, one that is more pedestrian, carpool, and cyclist friendly. We were exploring the idea of ditching our cars and the associated maintenance and gas bills and we knew it could never happen here. (I live in what might as well be the poster child for crappy urban planning. If you walk or ride around here, you’ll do so on a four lane highway with no sidewalks or cyclist lanes. And you won’t do it long. Chances are you’ll be dead within the week with the lunatic drivers. We don’t even have carpool lanes on the interstate.) Anyway, we were all tossing out ideas and places that might be fun to live and we were dreaming big dreams of no cars, better health, and money saved.

That is, until Mr. Joy Killer spoke up with, “It’ll never work. You guys know you’ll never do it. And if you do move, you’ll still drive. You can’t seriously have spent the last hour talking about this!” Oh, but we had. And we’d had fun doing it and some of us have already made the dream real. One member of the group has already gone through with a move, and two others are actively working on lobbying local governments for more bike and pedestrian friendly options. Sadly, I’m still here, but I’m looking at options.

The point is that these people had the courage to see a different life for themselves (and in the case of the lobbyists, for others, as well). They didn’t just say, “I can’t ever save on car expenses because there’s no way I can quit driving.” They looked beyond the life they live every day and said, “I can’t do it here, today, but I can do it somewhere, sometime. What are my options?”

I see this happen all the time. Someone complains about not being able to cut down on housing, taxes, or food expenses and when someone says, “Move to an area with a lower cost of living,” they simply shut down. “Can’t do it,” they say. But they could. It’s a free country and you can move wherever you want. Sure, you’re going to have to apply some thought to the process, do some research, and it’s not likely going to happen tomorrow, but it can happen.

Someone complains about not spending quality time with their kids and someone suggests, “Take them out of some of their activities so they’re home more,” or, “Cut down on your working hours so you’re home more.” And the person responds, “But if I take them out of activities, I’ll upset them and I can’t cut down on my work.” Well, maybe you can’t cut down at your current job, but maybe you could get a different job. And the kids probably won’t be damaged, especially if you can find some great family activity to replace the one you’re removing them from. Maybe you can’t do it today, but you can work toward a better life with your kids.

If you want to get serious about making big changes to save money and improve your quality of life, sometimes you have to do something drastic, and that often starts with having the courage to envision a different way of life for yourself. If you nip every idea in the bud with “can’t” and “won’t” nothing will change. If something is important to you, you have to be willing to find a way to make it work. And if you’re not willing to do that, at least stop trying to kill everyone else’s dreams. Just because you can’t or won’t do something, doesn’t mean that there aren’t plenty of people out there who would like to try. They have the courage to envision something different, radical, and which goes against the herd mentality. Do you?

(Photo courtesy of Paul Simpson)

Finding Another Way To Live The Dream

April 16, 2012 By Jennifer Derrick 4 Comments

When I was a kid, I wanted to be one of two things. An astronaut or a competitive figure skater. In the end it didn’t come down to a choice of love or money. My problems with math sidelined the first and, as for the second, let’s just say my center of gravity stopped cooperating somewhere around the age of thirteen. While I shelved those dreams in favor of something more realistic (if you can call being a writer realistic), I still have a fond place in my heart for those two things.

I used to think that if I couldn’t be an astronaut or a skater that there was no other way to enjoy or participate in the those things. To my mind, it was an all or nothing endeavor. And this was upsetting. Depressing, even. For a long time I thought that if I couldn’t go all the way then I couldn’t have those things in my life at all. So I cut those things out of my life and replaced them with things that I wasn’t as passionate about. Then one day I woke up and realized that it didn’t have to be all or nothing. Maybe I’d never soar above the Earth or win an Olympic medal, but there were plenty of ways that I could stay in touch with my passions.

In my case writing was the key. There are plenty of magazines and websites willing to pay for articles about skating or space exploration. There are plenty of technical manuals to be written for companies that work in the space program. Textbooks need pieces on the space program. Every season someone has to cover the local skating competitions for the paper. The list of ways I can write about my passions is almost endless. I just have to be willing to put myself out there and go for the work.

In the case of skating, I’ve also found that I can coach. I can teach other kids what I learned. I can choreograph their programs and help them choose their music. I may never coach a kid to the Olympics, but that’s okay. All I’m looking for is a way to stay in touch with my passion for skating and make a little money at the same time.

If you’ve discovered that your dream has slipped out of your reach, for whatever reason, and all but given up hope of ever earning a living (even a part-time living) from the things you love most, stop and think for a second. Okay, maybe you’ll never win an Oscar, dance in the Bolshoi, or win an NBA championship. But isn’t there some way to keep your passion in your life? Here are some thoughts and examples from several passions/professions to get you thinking.

Can you write about your passion?
Can you teach it to someone else?
Can you coach it?
Can you commentate about it?
Can you be the doctor to the athletes you admire?
Can you open a community theater or dance company?
Can you become an agent for other talented people?
Can you design/manufacture equipment for your passion?
Can you start your own band?
Can you sing in local groups or at church?
Can you act in local groups or scale down your expectations and be happy with commercial work?
Can you become a commercial graphic artist instead of a fine artist?
Can you become an expert that the media will seek out when they need information about your area of interest?
Is there a commercial application for your passion, such as writing jingles instead of symphonies?
Can you work at an animal shelter if you gave up on vet school?
Can you go into fashion design if your dreams of modeling didn’t pan out? Or vice versa?
Can you open a catering company if your dreams of being a celebrity chef haven’t worked out?

There are tons of ways to keep your passions in your life, you just have to give up the “all or nothing mentality.” Life’s a drag if you go through it wishing you could do something that stirs your interests. If you settle for an occupation you hate just because you think there’s no way you can remain involved with what really matters to you, you’ll end up depressed and burned out. And that’s no way to live. Rather than settle, take a step back and find some other way that you can get involved with the thing that matters most to you. You may find, as I did, that there are more things available to you than you’ll ever have time to pursue.

(Photo courtesy of Matthew Simantov)

Money Lessons Learned from Pretty Woman

February 16, 2012 By Jennifer Derrick 6 Comments

The movie, “Pretty Woman” came out when I was in college and it remains one of my favorites to this day. On the surface, the movie is about a prostitute (Vivian, played by Julia Roberts)) who finds the man of her dreams (Edward, played by Richard Gere) on one of her “dates” and they live happily ever after. Since prince charming is obscenely rich and the hooker isn’t, the movie also makes some interesting observations about money and class.

Poor Money Management Can Make You Do Desperate Things

You can make the case that the whole reason Vivian is a prostitute is because of poor money management. She left home with no skills and no money. Hooking is the only job she can get in L.A. Since the money she and her roommate earn is apparently blown on drugs and partying (mostly by the roommate), they are behind on rent and can’t save anything to go to trade school or to better their situation. As long as this pattern continues, hooking will be the only job available.

The Lesson: While poor money management doesn’t necessarily mean that you’re going to have to become a prostitute, poor money management can make you do desperate things. If you get deeply into debt or find yourself with no job and no skills, you may start thinking seriously about things like payday loans, embezzling money from your company, stealing, or any of a thousand other dangerous, illegal activities. Even if you don’t become that desperate, poor money management can make you feel helpless and out of control. That panic leads to further poor decisions. Your best hope is to keep yourself out of debt, if possible, keep your skills up to date, adjust your spending so that you always live beneath your means, and don’t run away from home (or quit a job) unless you have the skills and a plan to make it work.

Class Isn’t the Province of the Rich

In the movie, Vivian is polite, kind, good-hearted, and honest, yet she has no money. Edward and some of the other businessmen in the film are, frankly, jerks at times. Especially Edward’s right-hand man (Stuckey) who never treats Vivian as anything more than a whore. If you subscribe to stereotypes, the situation should be reversed and the businessmen should be the classy ones and the hooker should be the boorish one.

The Lesson: Money is not always indicative of class or good behavior. Plenty of rich people are jerks and plenty of poor people are kind and generous. You can’t judge someone based on their occupation or earnings, nor can you expect them to behave a certain way just because they are wealthy or poor.

Money Isn’t Everything

Edward has everything money can buy, but he isn’t happy. He doesn’t have any friends or family. All he has is his work. Vivian doesn’t have any money but, despite her occupation, seems pretty happy with her friends and life. Maybe she’s not overjoyed, but you get the feeling that she’s happier than Edward, or at least better able to see the funny side of things.

The Lesson: You can have a boatload of money and still be miserable, and you can be poor and be content. Money can buy things, but it can’t buy you an optimistic outlook, quality relationships, or an ability to enjoy the crazy ride that is life. Those things can’t be bought because they come from within and from being the sort of person that others genuinely want in their lives.

Dressing-Up the Outside Doesn’t Change the Inside

When Vivian gets to go shopping and she returns all dolled up in designer duds, she is even more beautiful. Suddenly the shopkeepers and everyone else take her seriously, which leads to one of the best quotes in all of movies.

Vivian: “I was in here yesterday and you wouldn’t wait on me?”

Snotty Shopkeeper: “Oh.”

Vivian: “You work on commission, right?”

Snotty Shopkeeper: “Yes.”

Vivian: “Big mistake. Big. Huge. I have to go shopping now.”

But it isn’t the clothes that have made her beautiful and worthy of notice. We’ve already seen that she’s a kind, caring person inside. Dressing up the outside only enhances the inside. On the other hand, the business people who are all dolled up all the time are, for the most part, ugly inside and no amount of designer clothes or trampling on people they deem inferior will make them into better people.

The Lesson(s): First, if you’re spending a ton of money on clothes, make-up, cars, and houses to try to make yourself into a better, more likable person on the outside you’re wasting your time. You’d do better to spend the money and time to improve yourself on the inside, first. Go to therapy to deal with your issues, learn to become more generous and forgiving, work on being friendlier, and generally make yourself into the sort of person that people want to spend time with. If you just look good, people will eventually discover that you’re really not worth their time and exclude you from their lives.

Second, never, ever judge someone by their appearance. You don’t know anything about them and you may end up cheating yourself out of a good friendship (or a commission) if you treat them badly.

Negotiation, Done Well, Is a Powerful Tool

One of the best scenes in the movie is when Edward and Vivian are negotiating her fee for a week. They bicker back and forth and finally settle on three thousand dollars. She then says, “I would have stayed for two,” and he says, “I would have paid four.” The both get what they want and at a price they agree upon.

The Lesson: They negotiated well, actually. She aimed high, he tried to lowball her, and she hung in and got a good middle number. This is how all great negotiations work. When you negotiate, you should first quote a price that is high, but not unrealistic. Your opponent will probably come in much lower than that and then you should come back with a number higher than his offer but lower than your original. You’ll probably be able to settle in the middle, getting what you want for a reasonable price without screwing the seller.

Don’t Give up on Your Dreams

Yes, Vivian gets all of her dreams in the end in a pretty sappy (and, admittedly, unrealistic) way. She gets the money and the man. You got the sense, though, from the beginning of the movie that she wouldn’t have been a hooker forever, with or without Edward in her life. She seemed to want more than that for herself. Even Kit, the roommate, realizes the power of having bigger dreams by the movie’s end and is looking at going to beauty school.

The Lesson: No matter how bad things seem, you have to keep dreaming of something bigger. If you don’t have dreams and the desire to work toward something better, you’ll end up stuck in whatever situation you’re currently in. No, you don’t have to dream of getting the man and the money, but maybe you can dream of starting your own business, buying a modest home, paying down some debt, or achieving some other goal that you set for yourself. Dreams keep you moving forward and give you the motivation to get beyond the bad things.

“Pretty Woman” is a light, fluffy movie for a rainy day. It’s a true chick-flick. If you study it, though, you soon realize that it is also about class conflict, money management and mis-management, dreams, and the mistakes we make when we judge others too hastily.

Your Dreams Aren’t Big Enough

April 12, 2011 By Jennifer Derrick 8 Comments

Years ago, I was having a conversation with a very wise friend. I was lamenting how it seemed like I was living a small life where nothing very interesting happened. I wasn’t very happy. My friend asked me what my dreams were. I listed some common, expected things like getting a house, advancing at work, and maybe doing some traveling. My friend said, “Well, that’s your problem. Your dreams aren’t big enough.”

At the time I didn’t think much of her advice. It didn’t really register as anything more than words (which is a nicer way of saying I thought she was spouting some New Age BS). However, once I really reflected on it I realized she was right. My dreams weren’t big enough. I was aiming low in my life. My biggest ambitions at the time were to advance at a job I hated and to get a house. The first goal was just stupid and the second was boring. It was no wonder I wasn’t happy.

We all need dreams to keep us motivated and moving forward. Dreams are the things that give us a reason to get up every day. Dreams are the way we visualize what we’d like to be and my dreams were not only small, but the dream of advancing at a job I couldn’t stand was downright unhealthy. As long as those were my only dreams, I was never going to get out of my rut and move on to better things. If I wanted to be happier, I needed to dream bigger and then do everything I could to make those dreams come true.

My friend’s advice is true in every aspect of life, including financial matters. If your finances aren’t going well, maybe you need to dream bigger. Instead of dreaming of that $1,000 emergency fund, dream of the $10,000 fund. If you hate your job, don’t dream of getting a promotion, dream of finding a better job or starting your own business. Dream of paying off all of your debt rather than just paying off one credit card. Big dreams lead to big actions on your part.

Some people say that you shouldn’t dream big because you’ll just end up disappointed when you don’t achieve those dreams. But I think that if you don’t dream big, you’ll never even come close. Think about this: If you dream of socking away $10,000 in a savings account and you only get halfway, you’ll have $5,000. But if you only ever dream of saving $1,000 and you achieve that dream, you’re still $4,000 behind the dream you only met halfway. If you dream of getting a promotion at your current, hated job and you get it, you’re still stuck in a place you can’t stand. But if you dream of getting a whole new job that doubles your salary and where you work with really cool people and you only get the new job and cool people, you’re still in a better place than you were. Big dreams can only be disappointing if you don’t try to achieve them at all. Then they just become part of a long list of all the “coulda, shoulda, and woulda” you missed out on in your life.

Through the years I’ve followed my friend’s advice. Whenever I’ve caught myself dreaming small, I’ve asked myself if this is really the dream I want to aim for, or am I settling for something lesser because I think the bigger dream is unattainable. This has served me well. When it came time to look for a new job, I didn’t settle for the first offer I got. Instead I planned and saved and went out on my own. I’ve dreamed of great travels and I’ve achieved quite a few of them. I’ve run marathons. I stopped dreaming about just getting “a house” and changed that dream to buying a large plot of land and building my own home. That’s the big dream I’m working toward now and I’m probably two-thirds of the way there.

If you ever feel like your life (financial, romantic, family, or career wise) isn’t going the way you want it to, simply ask yourself if your dreams are big enough. If you aren’t dreaming big, chances are you’re selling yourself short. Your big dreams pave the way for success and a better life. Working toward your dreams makes your life better. Even if you don’t achieve 100% of your dream, achieving even half of it will put you in a better place than you were in before.

Know What Makes You Happy to Improve Your Finances

January 6, 2011 By Jeffrey Strain 4 Comments

I am a firm believer, from my own experience, that after committing to spend less than you earn, the most important thing that you can do for your finances is to truly understand what is important to you and what makes you happy. I know that at first glance this doesn’t seem like it has anything to do with finances, but I found that before I figured out what was important to me and what made me happy, I spent a lot of money on things trying to achieve these goals without knowing what they really were. Instead, I assumed that what would make me happy were the things that seemed to make other people happy (there is a reason that commercials have a lot of happy people in them).

Everyone is different and what makes one person happy won’t necessarily make another person happy. I found it difficult to accept what made me happy at first (even though it should have been obvious to me long before I did actually accept and act upon it) because it wasn’t what society was telling me was supposed to be making me happy. My financial situation began to really improve when I accepted that experiences (particularly travel) made me far happier than things did.

Once I had this fact clearly in my head, the way I approached finances completely changed. There were a lot of things that I had in my life that I didn’t want to give up because I thought that they were things that would make me happy (that societal force again) which were in reality were an image rather than what I truly wanted. When I needed to stay within a budget, this often meant that I felt I had to give up one thing over another when both seemed equally as important to me. Once I clearly knew what made me happy, the focus went from “what do I have to give up” to “what do I have to do to ensure what makes me happy happen.”

I still have to make financial sacrifices to achieve many of the goals I want, but I am more than happy to make them because the reason I am making them is to do something that I am sure will make me happier in the long run. To meet the goal of traveling 2 weeks every month in 2011, I have decided to give up many things that I believe most people view as “essential” these days. Not having them certainly makes things less convenient at times and forces me to be creative at other times, but it also means that I can do the things which I enjoy doing the most. I consider that a pretty good trade-off.

Friends and family see that I travel a lot and are often jealous that I am able to do as much as I do. What they don’t see or consider are the financial decisions I make to enable me to do so. That is what I will be writing about this year — those decisions and the consequences that result from them. I already know that some of you are going to think I am a bit crazy (don’t worry, I already have plenty of people that think of me that way), some of the decisions I make will definitely not be the ones you would have made (and that is OK because we are different and I assume what makes us happy is different) and I will make a number of mistakes along the way (I always do). What I hope is that from my financial decision making process you are able to develop your own that works for you and your financial situation.

Do you know what is important to you and what makes you happy? I mean, do you really know? It is a difficult question that can create a lot of anxiety. I know because it sure did when I was coming to terms with what made me happy. If you do, I’d love to hear what it is in the comments and how/when you found what it was. If you still aren’t sure, I truly hope that this series will help you to think a lot more about what does and what you need to do to make it happen.