Wealth is the power to choose.James Clear
Financial wealth is the power to choose how to spend money.
Social wealth is the power to choose who to hang out with.
Time wealth is the power to choose how to spend your day.
Mental wealth is the power to choose how to spend your attention.
I regularly spend a good chunk of money on things that others probably wouldn’t. Chances are, my rich life and financial freedom are similar in some ways to yours and different in others. But I’m willing to bet we all agree that no one wants to be a slave to debt and that spending your money freely without anxiety, guilt, and stress without incurring unhealthy debt is an admirable goal.
A rich life may have some debt but the goal should always be directed at avoiding unhealthy debt. Most importantly, while still living abundantly without unknowingly hardwiring scarcity into your psyche. Avoiding the scarcity mindset is a tough task because our brains are wired to see the negative more so than the positive. I’ve learned that when your spending is aligned with your values, scarcity doesn’t show up as often.
In this article, I’d like to give a look into what Ramit Sethi calls Money Dials and how we’ve applied this to our own life on our path towards financial freedom. I hope it inspires you to think differently about your own financial journey.
Ramit Sethi has a name for the things we choose to spend our money on that lights us up in life. He calls them money dials or guilt-free spending. You could also think of these as your values that define who you are. These might include:
- Health/fitness memberships
- Personal collections
They can be big or small depending on where you’re at in your financial situation. And they are all yours. If done in a healthy way, you’ve earned the right to never be judged. The key is finding areas in your life to spend your money responsibly in a way that aligns with the person you are and who you want to become. Without any added guilt for doing so.
It does mean cutting the bogus stuff out of your life you don’t really care about any way to make more room for the good.
An example of my money dial
I get overjoyed when I find a business owner, food place, brand, etc. that I trust and admire. It’s a great feeling getting to know someone and/or exploring the business they’ve built. Its more fun when you learn by asking tons of questions about it and they’re OK with it! One of these examples for me is my wine shop, the Hidden Track Bottle Shop.
They have an outstanding selection of wines, many of which are natural wines (an important feature to the wines I drink), that are carefully curated from across the world. The best part of my rich life involves letting them fully guide my decisions without worrying about price. All I have to do is fumble my way into describing what it is I’m looking for and trust them to select the wine.
Here’s the kicker. I don’t say, under $10, $15, or $20 or ask about price when they suggest something. I love the feeling of giving them the sole power to decide for me only to find out what that price is at the counter and not flinch. It brings me joy to see the expression on their face and excitement in the way they talk about their suggestions. Fortunately, they know me so I won’t get too crazy with the price but there’s no anxiety, debate, or hesitation.
Passion like that is rare and hard to find and it’s beautiful to be a part of. I get the satisfaction of believing that I’ve empowered them to experience feelings of happiness and career satisfaction. This is just one of the many ways of using your money in a way that provides value to the world and people. And when price doesn’t run your life, that’s a rich life. Even if you play a low stakes game like this.
Now, how do you get here or justify this when you’re deep in debt?
I wasn’t always OK with spending over $12.88 on a bottle of wine. I used to penny-pinch like it was my job, even when I could afford something. I used to be stingy and fixate on numbers. I constantly worried about the balances in our checking/savings accounts and the impact of our purchases on them.
But these are the small things that make up my rich life. Sure, “live like no one else now so you can live like no one else later” is an admirable and successful model but the at all costs mindset can program scarcity. Yes, there are opportunity costs, but where do they end?
There’s always something to pay for or there’s never enough. If you choose to put off your rich life until someday, you’re deferring the amazing life you can have now with a modest couple of dollars.
Your financial happiness lies within your ability to feel the rightness of your financial decisions as they relate to who you are as a person. It takes introspection to identify those money habits that are hindering your ability to eliminate debt and move toward a richer life. The world is an abundant place and when you see it that way, you open up the possibility of receiving (and giving) wonderful gifts without scarcity.
Although I followed parts of the Dave Ramsey model and respected it, I always made room for my money dials. There was usually a lesser option that gave me the freedom Dave won’t. If you challenge the system while maintaining 100% respect for it, you might be able to incorporate a little this and that mindset in your debt payoff strategy.
Try starting with a simple debt-payoff strategy just beyond the minimum payment threshold so that its programs in your body and mind that you’re serious. Just enough to convince yourself you have skin in the game. Stick with that level for a period of time to build a baseline of competency. From there, you can slowly progress because you see your number getting lower and lower. I found the excel amortization schedule especially helpful for accountability.
Next, start adding a little more each month. Try adding just $10, $20, or $30 extra towards your debt to reinforce your commitment to your goal in your psyche. No matter how long it takes, it takes constant action in a way that supports your values and intentions. If you program your mind to see how the debt is slowly dissipating, rather than how far you have to go, you’re training yourself to see progress. As you see progress, you’ll learn more about yourself and your values which helps you avoid the scarcity mindset.
Becoming debt-free won’t be an aspirational goal until you begin shifting your mind to understanding your desires, wants, and needs. Debt isn’t the answer by itself. Where in your life do you see a limited amount of return on investment? When in your life have you spent money thinking it would provide lasting happiness but it only produced anxiety and loss?
Start to identify these experiences in your mind and approach them with an inquisitive nature. What’s going on inside your mind just before you click purchase, or when you feel yourself starting to want? Are you experiencing a moment of weakness? Did something stressful happen which has caused you to be more impulsive about this? Have you always impulse-bought to cheer yourself up when you’re feeling sad?
If you think of yourself as a resourceful person, more answers will come to you as it relates to the amazing things you want to do. There are ways to pay down your debt at an aggressive pace while fine-tuning your money dials.
If you never realize your money management or debt is a problem, you’re hindering yourself from becoming the best version of yourself. Wealth gives you freedom of choice and the choices become infinitely greater without shackles.
Your personal finances won’t magically sort themselves out overnight. Start to identify the negative thought patterns around money and the invisible scripts that run your life. Adjust your spending to align with who you are as a person in a way that brings you joy consistently throughout your life, with or without debt.
Never forget that there are more than monetary ways to give back and receive an abundance of life. We all have gifts to share and the simplest gestures of kindness make the world a better place.