Hitting a Wall: What to Do When It Feels Like You’re Not Making Financial Progress
Tell me if this sounds familiar.
You’re in reasonably good financial shape. You probably have an emergency fund of some kind. You’re almost definitely not carrying any high-interest debts – you might have a student loan or a mortgage, but nothing overwhelming. You’re probably contributing at least a little to retirement. Things are good.
Yet there’s still this overwhelming sense that you’re just running in place. Things might be on solid ground, but you’re not really building the foundation for the things you hope to have in life someday. You’re just running in place, one day after the next. Life is comfortable but… it’s not going anywhere.
You have some dreams, but they feel just as distant as they did years ago – they might be negligibly closer, but that’s all. Your life really doesn’t seem any better than it did a few years ago, except that you’re a few years older.
Is this it? Is the American dream just a treadmill with a pretty picture on the wall in front of it?
I want more out of life than that. Many of my friends do. I’m guessing you do, too. Yet that sense of running in place and never making real progress is a very common thing.
How does a person get out of that rut? For me, there are several techniques that I use to make sure I don’t feel like I’m just running in place with my financial progress. Here are six strategies that have worked really well for me over the years.
Strategy #1: Reassess Your Goals
If your life feels like you’re just running in place, what are you running for? What are you running from?
Often, that sense of just running in place or of hitting a wall comes when you’ve got a big goal you’ve been working towards and you’ve either achieved that goal in part or in full or else that goal is so far off in the future that it doesn’t seem to be a real part of your day to day life.
Let’s say that your big goal has been to repay some or all of your debts. You’ve managed to achieve it – you’re free from credit card debt. You have a lot of good financial habits that you’re continuing to follow but now the extra money feels rather purposeless. It’s tempting to just start splurging, but that feels wasteful, so you just kind of run in place and money builds up in your checking account. (I have a friend who is in this exact position at the moment and this post is in part written with him in mind.)
Maybe you do have a big goal, like retiring at age 50 or 55 with a healthy annual income from your retirement savings. The only catch is that you’re 32 and that goal seems like a lifetime away. You started when you were 28 and that seems almost forever in the past… and you have far more ground to cover ahead of you than you’ve already covered. That mountain in the distance looks just as far away as it ever has.
There are many variations on these stories and they all lead to that sense of plateauing, of no longer making meaningful progress toward any goal even though your tactics are still good and you haven’t really changed them.
Often, the problem isn’t your tactics, but your goal.
When you achieve a significant goal in life, there’s a sense of accomplishment, but then quickly thereafter there’s a sense of … nothing. You have a lot of good tactics in place for reaching the goal you just achieved, but now it feels aimless and empty.
If you’re in that situation, spend some time seriously thinking about what’s next in your life. What do you want to do in the future? Maybe you want to change careers. Maybe you want to start a business. Maybe you want to retire early. Maybe you want to get your kids through college with minimal or no student loans.
If you’re without a goal, set one.
The nice thing about big-long term financial goals is that, in the early stages, they’re usually really flexible. They center around either paying off debts or saving money somewhere. That means that you can decide, in a few years, to change your goal radically and you’re usually in good shape for whatever your new goal is. So don’t worry about the possibility of wanting a different goal in the future. Instead, worry about choosing a meaningful goal right now. What speaks to you? Make that your big goal and use that initial enthusiasm push you along for a while. Not only will it feel fresh and new, you’ll find that your initial progress feels quite big, too.
What if you’re in the other bucket and you do have a long-term goal but it seems incredibly far off in the future and your regular progress feels slow?
First of all, do a gut check and make sure that you still really want this goal. Visualize your life at the point where this goal will be achieved. Does that vision really excite you still? Or is it interesting, but not something that makes you feel a little tingly?
If you still find it exciting, indulge in visualizing that big goal regularly. This helps keep the goal feeling lively and meaningful.
For example, the exciting vision in my life is Sarah and I effectively retiring about the time our youngest son finishes his schooling. For the first couple of years, we are going to do a lot of touring around the United States, visiting tons of national parks and significant state parks and national monuments and weird roadside attractions and the like and simply seeing America, just the two of us, like we did when we were dating and in the early years of marriage before a flood of kids made that kind of thing much more difficult. Except, this time, we aren’t worried about a career or about jobs or anything and we still have our health and many years ahead of us. That, for me, is the dream. That’s the big vision.
If you don’t find it exciting, spend some time soul searching until you find that goal that seems exciting, then indulge in regular visualization of that goal. Again, it’s that regular visualization of something you deeply want that makes a huge difference in terms of making your forward progress seem meaningful.
In other words, if you really are on a treadmill, make sure that picture in front of you is as beautiful and engaging as possible so you don’t notice the treadmill as much.
Strategy #2: Change Your Focus
One reason why people start to feel like they’re stuck in a rut is that they’re looking at a particular way of measuring their forward progress that isn’t showing them the actual benefits of their effort.
A great example of this is when you focus on the standard of living of your day to day life when you’re aiming at a big financial goal. You might feel like you’ve been working hard forever, but nothing is changing and nothing is going to change for a long time. You’re still working at a demanding job. Your standard of living is roughly the same as it has been for a while. Nothing seems to be changing in your life, but you’re still working really hard.
In those situations, it can be really valuable to look frequently at a different metric, a different way of examining your life and charting your progress.
For example, rather than thinking about your day to day life, keep your eyes on a number like your net worth or your overall retirement balance. Keep track of those numbers over time and compare your current number to earlier ones.
In my own life, I look at both of those numbers fairly often when I’m feeling like I’m running in place, and then I don’t look at them much at all when I feel good about things. Seeing the growth in my net worth and in my retirement savings makes me feel really good about my financial progress, even if my day to day life feels unchanged.
In truth, my daily standard of living hasn’t changed much at all in the last decade, so if I looked at that, I would feel like I’m not headed in a great direction. However, when I look at my retirement accounts, Sarah’s retirement accounts, and our children’s 529 accounts, it’s pretty hard to miss the immense progress on all fronts. Things like helping our children with their education have gone from wistful dreams to mortal locks. Things like trying to retire in our early fifties (or so) isn’t a dream at all, it’s more like an inevitable conclusion (assuming that’s what we choose to do at that point).
My day to day life is a bad metric for what my future holds. I only feel disheartened when I look at my day to day life as the main metric for success. The thing I need to remember is that my big life goals involve being very busy and almost overwhelmed at this point in my life and having many parts of my life be simple and automatic is part of my biggest life ambitions. I want to raise three children to be solid citizens in the world (which I’m doing now) and then when they’re on their own, enjoy the rest of my life with Sarah in a very low stress environment (which I’m actively preparing for).
So, my metric for seeing whether or not I’m successful at those endeavors isn’t the quality of or change in my day to day life. If I’m looking at that, then I’m going to feel like I’m running in place. What I need to look at instead is the quality of my relationship with my children and my wife, how frequently I put aside time and energy to listen to them and genuinely try to understand them and guide my children in a positive way, and my savings progress toward the big events coming down the road. Those things are in good shape and they’re aiming in a very positive direction, even if my day to day life doesn’t seem to be radically impacted. The changes are there, but they’re subtle, and I have to know where to look.
Remember, when you look at a beautiful house, you usually don’t see the foundation right away. If you’re improving your foundation, then measure the foundation, not the house.
Strategy #3: Look for the Things That Don’t Matter
One common element of feeling like you’re hitting a wall and not making any progress is that you’re, in fact, not actually making any progress. If you take a peek at other indicators like account balances and net worth and find that it’s not growing very fast at all, then your money is going toward things that aren’t your goals and you’re making extremely slow progress (if any) toward your financial goals.
The Simple Dollar is loaded with advice on how to handle this situation, but there’s really one single piece of advice that stands above all else: What are you spending money on that’s unimportant to you? Whatever that is, cut it down to the bare minimum.
The common reaction that many people have is to reflexively say that everything they spend money on is important, but that’s very, very rarely true. Most of us spend at least some of our money on things that are really unimportant in the big scheme of our lives.
Instead, if you’re feeling like this, then it’s time to run through all of your expenditures with a fine toothed comb and ask yourself whether or not this item is really, really important to you and, if it’s not, look for ways to cut that spending to a bare minimum.
Is your car insurance vitally important to you? Well, you have to have it, but very few people are going to have deep personal feelings about their auto insurance policy. Shop around and get a cheaper rate, then start funneling that savings straight into your long term goals.
Is your cell phone plan vitally important to you? Many people may need or really want some form of cell phone plan, but many people are on a plan that’s overkill for what they actually use. Look at what you actually use, then shop around for a plan that matches that, and start funneling the savings straight into your long term goals.
Is the brand of ketchup you buy vitally important to you? Maybe if you’re a ketchup connoisseur, but for the vast majority of people, ketchup is ketchup. Start buying ketchup – and all of the other things that aren’t vitally important to you – in store brand form, and channel those savings straight toward your long term goals.
Do this with everything you spend money on. Stop spending your money – and thus the time and energy and effort that went into earning it – on things you don’t really care about and start channeling it toward stuff that you do care about. You’ll find that you start moving toward big goals far more rapidly.
Strategy #4: Automate Your Good Financial Moves in an Aggressive Way
A big part of strategy #3 is about channeling the “found money” in your life toward your big financial goals. This sounds good on paper, but when you have some cash in your checking account, it might not be on top of your mind to put that money toward retirement or college savings or whatever.
That’s where automation comes in. When you’ve cut your spending in some notable fashion, you should set up an automatic transfer of that exact amount you cut toward a big goal that you have.
Did you cut your monthly cell phone plan by $20? Add $20 per month to your automatic contribution to your Roth IRA.
Did you save $60 a year by changing auto insurance policies? Bump up your retirement savings at work by $5 a month.
Did you manage to trim $50 a month from your grocery and household supplies spending by switching to mostly store brands? Schedule an automatic extra payment on one of your debts for – you guessed it – $50 a month.
Did you find some other way to save $10 a week? Set up an automatic $10 weekly transfer from your checking to your savings to start building up an emergency fund, so the next car breakdown doesn’t catch you off guard.
Since you know how those cuts were made, doing something else with the savings shouldn’t affect your standard of living one iota outside of those specific changes. Meanwhile, you’re now making automatic progress toward whatever your goal might be.
That progress will become apparent over time if you’re looking at the right metrics (see Strategy #2). You’ll see your debts declining a little faster. You’ll see your retirement savings growing a little faster. You’ll stop plateauing and start heading toward your goals again.
Strategy #5: Focus on the Meaning: What Do Your Contributions Actually Represent?
Often, when we’re working toward a big financial goal, the little steps we take along the way can feel really insignificant and meaningful. What is a step when you’re running a marathon? It’s one of tens of thousands of other steps, right?
Yet each of those steps requires some effort. Each of those steps requires some sacrifice. If you’re putting $100 into retirement savings, that’s $100 that you’re not enjoying in one’s daily life. That’s a choice and a sacrifice, and it’s one that many people start to struggle with.
It’s an even more difficult choice when it’s hard to tangibly see what the $100 toward a big financial goal represents. $100 might be a great dinner with my wife and a movie together and maybe a stop at a bookstore where we each pick out a book. What is $100 toward retirement? It’s hard to see it.
For me, I find that there is a great deal of value in seeing what those individual steps represent. For me, what I have found a great deal of value in doing is breaking down my cost of living into how much that is per day and using that as a measuring stick – I call it a “day of freedom.”
Let’s say my annual living expenses are $36,500 per year. That’s just a convenient number to make this easy to understand. If I translate that into a day, that means that every $100 I have in retirement represents roughly a day of freedom from having to work. It’s a day I can sleep in. It’s a day I can rise and stretch and not have to think about work unless I want to keep working on a project. It’s a day I can fill with leisure if I choose. It’s a day where I can chase down whatever passion is on my mind. I can go on a long walk or whatever it is that I want to do. It’s just a day of complete freedom. It’s a complete day of freedom for Sarah, too; we might spend it together, or we might each do our own thing.
Every $100 I put into retirement savings represents a day of complete freedom like that. Even better, every time I put in $100, it’s an extra day on the front end of retirement, meaning a day when I’m as physically and mentally healthy as I’m going to be.
When I look at my $100 contribution to retirement that way, things start to reshape themselves. I could spend $100 on an exorbitant date with Sarah, or we could have a modest dinner at home, cuddle up and watch a Netflix movie, and go on a nighttime walk hand in hand, and then that $100 goes into retirement and buys us a day of freedom later.
Naturally, there are some things and some experiences where it’s pretty sweet to have them right now, but that threshold gets a lot higher when I see it gobbling up days of freedom from my life. Those are beautiful and valuable and precious.
You can do that kind of translation with almost any goal that you have. Retirement makes it really easy, but you can look at college savings as basically opening opportunities for your kids. You can look at debt freedom as lower bills and more opportunities for you. Just divide it up into pieces that are really meaningful for you – for me, the thought of a day of freedom is really powerful, so I use it a lot. $100 in retirement savings buys me a day of freedom, and each and every $100 contribution moves those days of freedom ever closer to today. Eventually, my life moving forward and those days building backward are going to meet up, and every single bit of savings shrinks that gap.
Strategy #6: Raise Your Income
This final strategy is a little different because it’s not just a switch that most of us can easily flip in our lives, or else we’d do it. Raising your income usually requires a lot of effort within your career or entrepreneurial path, a career switch, or a second job or side gig, and all of those are challenging and require effort and planning.
However, if you want a way to sustainably get out of your financial slog, jumpstarting your income (and directing that increase to your financial goals) is a guaranteed way to do it.
So, how is this relevant and actionable? Simply put, you can simply choose to make improving your income into a short-term or medium-term goal that’s part of your long-term financial goals. Your goal might be to retire early, but the thing you can really work on right now on the way to that goal is setting yourself up for more earnings.
For example, if you think that the best next step to earning more for you is to get a raise or a promotion at work, talk to your boss about a concrete plan with clear steps that you can follow to take you to that goal. That plan becomes your medium-term goal; the individual steps are short-term goals.
If you want to start a side business, write up a business plan (short-term goal) and execute that plan (medium-term goal) by following all of the steps (a bunch of short-term goals).
If you want to launch a new career, figure out what your path looks like from where you’re at to that new career path (short-term goal) and start following that path (medium-term goal) by getting the education you need (medium-term) a class at a time (short-term) and setting yourself up to dive into that new path with success.
If you want to jump to a new job in your career path, figure out what you need to have on your resume to make that leap (short-term task) and make building that resume your goal (medium-term goal). Each step in that process is a short-term goal that you can work on at your current job or in the evenings.
In short, you turn income growth into a medium-term goal, and the steps to getting there into short-term goals, as part of your long-term financial goals.
Those steps aren’t guarantees of more money – nothing ever is. However, those steps are all about you controlling the part of the process that you can actually control, which is your actions, thoughts, and behavior. You do your part and good things will typically follow.
- Read more: Nine Strategies to Earn More Money This Year
When you feel like you’re stuck in place with your financial progress, there are many potential causes and you’ll often find that more than one of them apply to you. You might not have a compelling long term vision at all. You might be focused on the wrong measurement of success. You might be misusing your resources and wasting your efforts. You might not be appreciative of the usefulness of each step and what it really means. Or, you might just need some tangible short term and medium term goals.
Whatever the case may be, there are ways to break through this wall and either start making fresh financial progress or recognize that you’re actually making a lot more progress than you thought. In either case, your path forward becomes illuminated in a whole new way.
Read more by Trent Hamm:
- Practical Goal Setting for Financial and Personal Success
- Some Advice for When You’re Losing Motivation for Your Financial Plans
- Thoughts on Purpose and Retirement, Early or Otherwise
The post Hitting a Wall: What to Do When It Feels Like You’re Not Making Financial Progress appeared first on The Simple Dollar.