Put Out the Biggest Fires First
I love parks.
Houston has some amazing local parks.
But nothing comes close to the grandeur of a National Park.
Thousands upon thousands of acres of well-preserved beauty just there to be taken in.
Though their beauty is natural, the parks are manage by Park Rangers.
One of their responsibilities is keeping track of wildfires and putting them out.
However, when the dry season comes, are very common.
And when they are resource constrained, they can't put out every single fire.
Their focus turns from every fire to the most pressing fires that have the highest risk to the health of the entire park.
Some of us have a lot of money fires.
Student Loans, 401(k), IRA, HSA, Credit Card debt, Saving for a Vacation, Spending Too Much on Eating Out - it can quickly feel like an impossible situation.
This week, what if you decided to pick your most dangerous fires and take steps towards putting them out.
This might seem obvious, but here's the problem: It's fun to put out easy, small fires.
We're suckers for quick wins - even if those wins aren't making an impact on our situation.
Ever do chores convincing yourself you're "being productive" while actively avoiding a pressing work project?
We do this with our money.
"I ate out twice this week instead of three times!"
"Isn't your car payment $1,000?"
"......."
Small changes to eating habits can certainly add up over time, but dealing with the small stuff while doing nothing about the large is doing nothing but hurting your future self.
So how do you decide which financial fires to fight first?
You’ve got to look at what each fire is really costing you over time. Ask yourself:
- What is that credit card balance costing you in interest over the next few years?
- What’s the long-term cost of waiting another year to open an IRA?
- What’s that $100/week DoorDash habit really worth if you invested it instead?
These aren’t just annoying habits or small balances; some of them are massive opportunity costs.
For example:
- Investing $7,000/year in an IRA at 6% for 30 years could give you $553,000
- Delay that by just one year and you’ve got $38,000 less in retirement
- That’s a big fire worth your attention
Or that $4,000 credit card balance at 22%? It could cost you $5,000+ in interest if you only make minimum payments.
NerdWallet has a great Investment Calculator that you can use to plot out how much things are really costing you over time.
Managing your money can feel overwhelming and it's often difficult on knowing where to start.
If you are struggling, start with a basic conversation on ChatGPT, feel free to reach out to me, and, if the time is right, engage with a Certified Financial Planner.
Remember, your life will likely never be fire free, but if you've got the large ones taken care of, you'll feel much better.
