Welcome to Under 2, an email series delivering short insights to empower your money life – in 2 minutes or less.
Sign-up below to get Under 2 and other news from me landing in your inbox:
There’s one constant in parenting: once you figure something out, it changes.
Which is why every parent’s secret weapon is the unending ability to adapt.
The same is true with our money.
We oftentimes believe a thoroughly planned budget coupled with unflagging will is the means to financial peace.
However, rigid systems leave us unwittingly fragile, brittle in the face of new or unforeseen adversity.
Last week I mentioned adding an extra chunk to your mortgage payment, to capitalize on the compounding gains of an extra small monthly amount to eliminate your mortgage years faster. This seems opposite to my standard advice to only attack one debt at a time – mortgage typically being last on the list.
But flexibility is key!
The on-the-side mortgage move is such a big play, it can be worth doing concurrently with working through your one-at-a-time debt attack list.
But it’s also one of those places you can build in “committed” cashflow that you can easily un-commit.
Meaning, when you build in monthly payments that are higher than they need to be, you’ve built in places for recapturing cashflow when things change and you need that cashflow back in your bank account. Of course, you can’t recapture what you’ve already paid, so you must balance the degree to which you use this strategy.
Another tactic is to get less attached to your various services and subscriptions. Our loss aversion bias can make it such a drama to drop cable, switch cell phone carriers, or cancel a membership. But with practice, staying nimble to making these changes regularly provides far more flexible control over your cashflow.
The summer before college, I was required to lay out an entire four-year plan before arriving on campus, down to each individual class I’d be taking and when, accounting for all my major’s requirements and deciding on electives. Even each class’s prerequisites and any schedule oddities (offered spring semester only, etc.) were to be noted.
It was a heck of a plan.
We were provided with a course catalog, a folded posterboard template, and a pile of colorful Post-It notes to create our masterpiece.
Turns out this last detail was the key to this plan’s brilliance.
When I had to drop a class due to being sick (thanks, mono), this Post-It plan was ready-made for rearranging. I moved my dropped spring Chem class to the following year, seeing that would nudge Biochem (for which Chem was a noted prerequisite) to the following semester.
The initial plan was thorough, but also specifically designed to be flexible. And this built-in flexibility was key to making strategic changes when they became necessary, while avoiding unpleasant surprises later.
Sticking 100% to the plan almost never works, and that’s more true with money than anything else. Therefore, remember it’s often financial agility (the Post-It version of the plan), not rigor (the pen on paper version), that brings us through.
The flexible are the ones who prevail and the stubborn are actually brittle and break in the face of challenge, or something that they need to adapt to.
James Clear, interview on Good Inside podcast
I hope you enjoyed this edition of Under 2, an email series designed to share quick bites of wisdom to empower your financial journey (while keeping it short). Be sure to sign-up below to get these messages in your inbox.
All for now,
Lindsey