This picture shows a note I found very humorous from my 8 year old son that he left for himself at the breakfast table. Then the more I thought about it I began to feel sad that he was talking to himself this way and was getting down on himself because he couldn’t remember to not leave his shoes everywhere in the house and the yard. I talked to him about it and encouraged him to just do his best. This is a good example of what can happen when you don’t recognize areas in which you are winning you can quickly turn to “Loser Talk.” I immediately transferred that to my own life and reflected on how easy it is to get discouraged or change course because you haven’t received any form of perceived benefit. The perception is key, you may be making all sorts of progress but if you haven’t recognized that or someone else hasn’t pointed it out to you could quickly lose your focus or your motivation. To me this is a key concept at least with Personal Finance because those recognized small wins are key to winning the race (insert cheesy clichÃ© here: “It’s a marathon not a sprint!”).
Small Wins as Applied to Debt Reduction
There are a variety of techniques you can use to slog your way through a mountain of outstanding debt. I would argue that it’s the best way to bail yourself out is to go for the small wins rather than spend all of your time worrying about how much interest you are paying. I’ll take this stand every time that behaviorally nothing keeps you moving like a little success. You can perceive you are winning by watching your debt disappear.
We’ve talked several times about the debt snowball and it’s importance in debt reduction. It’s entirely focused on the small wins. Order your outstanding debts from smallest to largest, make minimum payments on everything except your smallest debt and throw every thing you can find at that debt. When you’ve done that, rinse, lather, repeat. Celebrate in your head or some other free method, and keep going. The snowball is really the best analogy because the harder you roll the bigger it gets and the sooner you’ll be free.
Snowflaking is a term used by debt snowballers to refer to those little pockets of found money or extra savings that you can immediately throw at a debt. Monetarily it might not make much difference but it’s great to feel like you are really blasting it from every angle. It’s like this: you login to your credit union account and see that you’ve made $3.20 in interest off of your emergency fund and you immediately send a Bill Payment to your latest snowball debt. Then you go through your bedside table and find $15.27 in spare change that you take to the bank and throw at your debt. Rather than waiting around for the end of the month to send what you’ve got left in your account towards your debt you are being intentional and active about attacking it. This technique is especially helpful for larger debts that you’re going to be working on for months or years. Personally I love this technique and it makes me so happy to have taken another chunk out of my mountain.
Small Wins with Your Budget
You do have a budget right? What? You don’t? Get a budget! I love this quote in “The Millionaire Next Door” of 385 respondents worth more than a million dollars when asked if they used a budget 83% stated they did. So why would a millionaire need to budget? “They became millionaires by budgeting and controlling expenses, and they maintain their affluent status the same way.”
In your budget a small win can simply be having some form of variable expense come up and you have money allocated for it. Seems lame I know but it’s AWESOME! For my own example, when I started budgeting actively for our family we came up on some car repairs that had to be made for my truck. Normally this would have been an exercise in shuffling money around, stress, gnashing of teeth, etc. but because we have a car maintenance category that we contribute to every month it was merely paid for out of our budget with absolutely no impact to any of our other expenses. Now that’s a small win.
Small Wins in Your Career
I’ve struggled with this in the past my self if you’re killing it at work and making stuff happen but no one takes the time to give you a quick “nice job” or give you some made up award it’s easy to get disillusioned and to lose motivation. For you management types don’t forget to recognize your employees, it will go a long way to bolster their confidence and encourage them to keep on it. This is a zero dollar solution, celebrate their small wins with them, publically if they won’t be embarrassed and see what a difference it makes.
For me this is a very real reminder, I started this blog not too long ago and after working on it for a month getting it going with no apparent readers or traffic I quickly got down on myself and began to question whether this was a valid use of my time and whether anyone would care to read FiscalGeek then something amazing happened. The nice people at MSN Smartmoney found my post on: Reviving your Cell Phone or Electronic Devices from Water Damage and featured it on their blog, which then was put on the front page of MSN.com for 3 days. I had an extraordinary amount of vistors and a whole host of new readers. This wasn’t exactly a small win, I would call this huge, but that being said, certainly revived my desire to continue forward. I encourage you to celebrate those moments in your life and recognize them for what they are plain and simple”¦. Wins.