As part of my series, Eight Rules for Life, here’s my third plan.
Managing finances is a lot like weight loss programs. If you try to improve almost any plan will likely work to a certain extent for a while. The reason most weight loss plans fail is due to the sacrificing that takes place while you’re losing weight. What happens once you’ve lost it? The diet plan likely isn’t sustainable or desirable permanently. That’s why the most common outcome is putting the weight right back on. Managing your finances over the long run is very much a different version of a similar thing. There needs to be a balanced and sustainability in your planning. That’s where my Third Plan comes into play.
Here’s how it works. Each month after you’ve paid the bills allocate extra money in thirds. A Third saved/invested. A Third used to pay down debt. A Third set aside for extras/fun stuff. This provides you with a path to make progress with all your financial needs and goals simultaneously without sacrificing. What’s even better is when you’ve paid off all your debt and can go to a 50-50 plan.
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