Eight Keys for Success: The Third Plan

Episode Transcript

Speaker 1 (00:00):
It is six h four. Good morning, Brian Muddy and
Joel malickin with you. Ordinarily I bring you my top
three takeaways for today. However, this is the last day
I'll be in prior to Thanksgiving, and as part of
my annual Thanksgiving tradition, I bring you my isms as

(00:20):
they were long called, and then after a consultant got involved,
they became my eight keys for success. Anyway, they are
all my various different sayings, and we're up to the
third plan. Now. The third plan gets down to little
financial planning here. Let's talk about it. Managing finances a

(00:41):
lot like weight loss programs. If you try to improve
almost any plan is probably going to work for at
least a little while. Right, If you are not being
intentional with your money and suddenly you're trying to be
more intentional, yaddar, you're going to have some improvement there.
But the reason why most weight loss plans fail is

(01:03):
what due to the sacrificing that takes place while you're
losing that weight, and then you know what happens once
you've lost it. Diet plans often aren't sustainable. They're not
desirable permanently, and that's why the most common outcome with
most diet plans is to kind of get to where

(01:23):
you want to get to, or maybe close to it,
and then it comes right back, comes right back on.
Seems like it happens even quicker than it came off
to right now. Managing your finances over the long run
very much a different version of a similar thing. There
needs to be balance and sustainability in your planning. That's

(01:44):
where my third plan comes into play. Here's how it works.
Each month, after you've paid the bills, allocate extra money
in two thirds. A third that you save and invest,
a third that's use to pay down debt, a third
set aside for extras and fun stuff. This provides you

(02:07):
with the path to make progress with all of your
financial needs and goals simultaneously without sacrificing one of the
ways where people who are trying to be intentional and
do better with money, where they will also get off track.
You're like, oh, I want to pay down my debt,
and so you might go after that for a couple
of months to the extent you can, and you get

(02:28):
credit cards, you know, pay down a little bit, and
you make some progress, and then the holidays roll around.
What happens, boom right back or whatever something comes up
life happens. But then the other thing that comes to
the place. You start making some progress somewhere, and then
all of a sudden, ooh, I you know, want to
go on vacation, and one of two things happens. You

(02:52):
either raid what you've already been working on to try
to account for that vacation in this example, or you
don't do it and then you resent it because you're like, well,
I don't have any money for fun stuff, and it's
going to take me a long time to pay down
on my debt, and is this what life is going
to be like? It's why it's important to have a
path forward in all aspects of your life. And I've

(03:13):
had people say, look, I might only have like one
hundred bucks extra month at the end of the month. Here, Yeah,
that's fine. If we're doing that, do thirty three bucks
that you're saving and investing thirty three dollars that you're
using to pay down debt. Put thirty three bucks over there,
you know for fun stuff. It'll accumulate on a relative
basis a little bit over time. Just do it. It's

(03:34):
as much about the discipline as anything else. And what
it does is it provides a path to make progress,
but it also ends up incentivizing you. Let's say, for example,
you get to the point where you pay down your debt.
Not only is that an amazing feeling for people, but

(03:54):
then guess what, you can go to a fifty to
fifty plan, or you're saving and investing half of everything
and it's extra during the course of the month, you
have fifty percent for fun stuff. The plan acts as
a constant positive feedback loop that can always kind of
gamify the process. It makes you want to do more
of this because you see the progress and you're like,

(04:15):
oh my gosh, this is cool, this is fun. Life
is getting better. Making financial progress is actually fun. Once
you have a plan, you get intentional about it. And
by the way, I've never once found a person who
didn't think that was true. I know I'm a financial wonk,
but I've never once come across a person who's engaged
in the third plan that's come back and said anything
other then, you know what, that was pretty cool, and

(04:38):
I just wanted to do more of it. So it
is a rewarding process to make all that financial progress
as well. All right on the other side, we'll be
up to the power of negotiation. That's next