Go Big or Go Home: The Bold “One Til It’s Done” Plan

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One Til It's DoneI’ve coined a new phrase to describe my money-saving strategy: One Til It’s Done.

If you read many personal finance blogs, you’ll find 9,846,342 articles that recommend you “automate” your savings into a litany of sub-accounts.

(That means you transfer a small amount each month – say, $50 towards your trip to Hawaii – into an online piggy bank earmarked for that purpose.)

Advice often becomes cliché because it’s true. Savings automation is popular because it’s solid. It works.

But it’s not the ONLY method. I prefer a different tactic, one that accommodates my characteristic enthusiasm and restlessness.

I call it the “One Til It’s Done” strategy, and it’s simple: I save for ONE thing at a time. When it’s done, I move onto the next. (Self-explanatory, huh?)

What Double-Digit Debt Taught Me About Piggy Banks

The inspiration came from learning about debt-payoff strategies.

The two most popular debt-repayment tactics share a central premise: people with multiple debt loads should concentrate their efforts on attacking one debt at a time.

A person with a car payment, a Visa balance and a MasterCard balance, for instance, should annihilate one debt before ambushing the next.

(There are dissenting views on which debt to pick first. One strategy believes that a person should tackle the smallest balance. The other method says a person should target the highest-interest load. Regardless of which tactic suits your style, both techniques are based on the same underlying principle: people should decimate one debt before regrouping their forces to attack the next. Focus on one ‘til it’s done.)

That makes sense. Our brains are finite. Humans possess what I call limited mental bandwidth.” If we overload our minds with data, we’ll slow to the pace of a 1990’s-era dial-up connection. We’ll get distracted. We’ll forget things. We’ll drop our signal.

It’s easier to focus on one goal. We’ll make huge strides, quickly. We’ll feel jazzed. That enthusiasm triggers us to push harder. Now we’re in a positive-reinforcement loop.

Effort fuels results. Results fuel bigger effort.

Defeating high-interest debt is an audacious goal. Yet thousands of people succeed – and many do it in record time.

So why shouldn’t their tactics work for people who are trying to pursue other bold goals?

How Much Do You Want It?

Here’s an added bonus: the One Til It’s Done savings strategy is litmus test for your dreams. If you’re not passionate about something, you’ll lack the enthusiasm to stockpile your cash for it.

For example: at this point in my life, I don’t want to go to grad school (despite the fact that some people tell me I “should.”)

Maybe I could be talked into attending. I’m easily swayed.

If I have to put my money where my mouth is, though, I’ll never get excited about saving money for it. I might stash a painless $50 or $75 a month into a textbook sub-savings account, but I’ll never be passionate enough to dedicate 30 or 40 or 50 percent of my income towards it. Gee, I must not really want it.

One Til It’s Done, in other words, forces people to prioritize. It helps you decide which dreams are really yours.

Update: The 2012 Investing Challenge, Month 10

In my early twenties, the only thing I wanted from life was a chance to travel the world. I was obsessed with this dream. I could taste it.

So – without articulating this philosophy – I shoveled every cent into a travel fund. I wasn’t attempting a personal finance tactic. I was simply aligning my money with my priorities. At that time, my top priority was to travel. It made sense that every spare dollar would be dedicated to that cause.

Now, 27 countries later, I’m satisfied with my globetrotting forays. I’m ready to focus on something else I’m passionate about: creating financial freedom.

Earlier this year, my partner Will and I decided to undertake an ambitious project: we’ll dedicate 2012 to living on his income and investing the entirety of mine. (New readers: discover our 2012 Investing Challenge here.)

It’s now the first week of November. Ten months down. Two to go.

We’ve maxed out my Roth IRA, we paid cash for a $17,021 renovation of one of our income-producing rental units, paid cash for a $10,000 renovation on another rental house, and I put some money into this website. And of course, I paid quarterly taxes. (I can’t ever seem to escape that expense.)

I see this as One Til It’s Done in action. All our money went towards one goal (invest for financial freedom). We diversified our investments into index funds, real estate and a micro-business. But the goal is unified.

So what’s next on the agenda?

With only two months left to go in 2012, I realize Will hasn’t contributed a dime to his own Roth IRA. Oops.

The deadline to make IRA contributions isn’t until Tax Day, 2013. But I’d rather just get it over with.

Yesterday I dumped $1,700 into Will’s Roth IRA. Once I shift some money around, I’ll max out the rest ($5,000 total) within the next two weeks.

Done. Finished. Finito. See how cognitively simple that was? My limited mental bandwidth can check this item off the list.

After that, my checking balance will hover near zero (which is fine, because we’re living on Will’s income). I’ll need to figure out how to invest any income I receive during the final two months of the year.

Regardless of what I do, I’m following the One Til It’s Done strategy. That meta-goal is set: I want financial freedom.

So I live frugally. Invest. Repeat until I attain freedom. Or at least until New Year’s Eve. :-)




Thanks to Bruce Berrien for today’s photo.

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20 Responses to “Go Big or Go Home: The Bold “One Til It’s Done” Plan”

  1. Anne @ Unique Gifter
    06. Nov, 2012 at 11:47 am #

    So – any thoughts on the plan for next year?
    We work on a macro “one till it’s done” but that’s the mortgage, so it’s kind of a longer term goal! (2 years left)

    • Afford Anything
      06. Nov, 2012 at 5:29 pm #

      @Anne — Only two years until your mortgage is repaid? That’s awesome!

      I have one big idea for how I’ll direct my money 2013. It’s something I’m excited about. I’m holding off on the “official” announcement until I’m sure … :-)

  2. Money Beagle
    06. Nov, 2012 at 11:52 am #

    I’ve thought about this approach but I like having the flexibility of financial decisions at the same time. My house will need a new roof next year so had to save for that, but what if one of the cars dies and we need to apply some to replacing it? Having a split fund would allow us to more easily address that with the money already earmarked? I don’t necessarily disagree with your approach, but I’m not sure it’s practical for everybody.

    • Afford Anything
      06. Nov, 2012 at 5:28 pm #

      @Money Beagle — Certainly, if a huge emergency popped up, I’d raid one goal for the sake of another. If my cat needed emergency veterinary treatment, I’d raid my travel fund.

      Of course, that said, I poist this strategy only as one possible alternative. People should pick the method that works best for them. And I think that automating savings into multiple sub-accounts is effective for a ton of people; as I said, it’s cliche because it’s such good advice.

  3. AverageJoe
    06. Nov, 2012 at 12:39 pm #

    I like this “one till it’s done” strategy. What I don’t care for are the “save for the next thing on the list so that I totally miss the value of compounding interest.” That’s what lots of my clients used to want to do until I showed them how much money they gain by saving early and often for long term stuff.

  4. Financial Samurai
    06. Nov, 2012 at 12:51 pm #

    Sounds like a good strategy! What if you don’t have anything you want to buy though? Does that mean I’m in bliss then?

    It’s weird, but there’s literally NOTHING I want. I don’t need anything I don’t have.

    Sam

    • Afford Anything
      06. Nov, 2012 at 5:25 pm #

      @Financial Sam — You sound so Zen. I need life-happiness lessons from you. I’m the opposite: restless and constantly striving. :-)

  5. Zach Turner
    06. Nov, 2012 at 1:13 pm #

    I’m afraid I’m gonna have to disagree with one of your ideas! I know, guess there’s a first for everything. When u say its “easier to focus on one goal at a time” that’s not always true for everyone. The moniker Generalist is not just a label, its an inherent need to do more than one thing at a time. I find it easier to have many projects going at once than getting bored with one. This is why I’ve also traveled the world while writing books and buyimg real estate and making it all fit into my life at the same time. As you say tho, there r more ways than one of doing things and i would love to be able to just focus on one thing at a time but my brain will not allow it.

    Its all about finding out how ur brain works and what makes u the most fulfilled everyday. R u the kind of person who is excited about the same things everyday or do u crave new input and challenges in zeveral genres throughout ur day? I think between the two of us, we represent a wide spectrum of people who i hope we can both help out. :-)

    • Afford Anything
      06. Nov, 2012 at 2:34 pm #

      @Zach — Haha, I’m glad you disagree! This site would be boring if everyone agreed, all the time. :-) I think you’re right on with your statement that success hinges on “finding out how your brain works.” As I mentioned at the start of the post, saving for multiple goals (automating into multiple sub-accounts) is solid advice that works. I’m just offering an alternative. At the end of the day, each person should pick the tactic that suits their style. Personal finance is personal.

  6. krantcents
    06. Nov, 2012 at 4:42 pm #

    I was always a saver! I just take the goal amount and divide it by the number of months I think I need to achieve it. Then I set up a payroll deduction and it is automatic.

  7. Jen
    06. Nov, 2012 at 7:11 pm #

    Thanks for this! I have so many goals and lists that I get overwhelmed trying to do everything at once. I needed a reminder :)

  8. Kim@Eyesonthedollar
    06. Nov, 2012 at 10:45 pm #

    I’m curious if you will invest all of your income in 2013 as well. I love the idea of living off one income and how you’ve started your rental empire. Very fun to follow.

  9. Brian
    06. Nov, 2012 at 11:34 pm #

    As I was reading your intro, I was thinking – “oh, like a reverse debt snowball”. Clever. I often get discouraged by saving a little bit for multiple items at once and not making ‘progress’.

    I enjoy reading about your rental empire – we have similar ambitions (live off one income, have multiple rentals) but are in an expensive Canadian market, so it’s going a bit slower.

    • Afford Anything
      07. Nov, 2012 at 11:27 am #

      @Brian — Exactly, just like a reverse debt snowball! :-) I like the way you think, and — of course — I like your ambitions. If your local housing market is prohibitively expensive, you could always consider investing in another town or city. I know a handful of investors from the Northeastern U.S. (New York, D.C., Boston) who invest in the Midwest or the Southeast because the rental market is more profitable in those spots. If you do invest elsewhere, though, make sure you understand the area well … make several trips there. :-)

  10. Brick By Brick Investing | Marvin
    07. Nov, 2012 at 9:43 am #

    I like the one till it’s done plan for finances but I also like it for getting things done around the house and on my blog as well. It can be very daunting when you have multiple tasks and ration out your efforts to multiple causes. In the end you may feel that you’ve gotten nothing done. One until it’s done is the method of choice for me now and has been for quite some time.

  11. Ornella @ Moneylicious
    08. Nov, 2012 at 1:53 pm #

    Depending on the goals, it’s better that I have more than one going. With that being said, there are times one focusing on one goal is best. I do like the term you coined!

    • Afford Anything
      09. Nov, 2012 at 10:37 am #

      Thanks Ornella! I love phrases that rhyme. :-) I’m a big nerd.

  12. JMK
    18. Nov, 2012 at 5:30 pm #

    We have two goals. Retire in our mid 50s and take a trip each year in the meantime. Yes the trips are delaying the early retirement by at least 2 years, but we’ve decided that’s a trade off we want to make, especially while the kids are still at home (11/18).

    Every Friday (yes weekly) I pay off that week’s spending (all on the VISA for the flight miles) and assess the planned expenses for the next few weeks. I have all our planned spending laid out for the next year. I determine the maximum I can skim off the account without causing a problem next week or next month, while still maintaining a $1000 balance to avoid bank charges. Then depending on the markets I sent the excess to either our retirement accounts or make an extra mortgage payment (getting rid of the mortgage is key to early retirement).

    I think of it as dealing out the cards to two players: Mortgage and Retirement. If the markets are up the money goes to the Mortgage. If the markets are down (or having a sale) it goes into our Retirement accounts. Each week, the same thing: Mortgage, Retirement, Retirement, Mortgage, and so on. Once a year Travel sits down at the table and wants to play. If a trip is on the horizon, I deal the weekly excess to Travel every week until there is enough to cover the costs. Then Travel leaves until next year and I go back to dealing the cash cards to Mortgage and Retirement. Every 5 years one of our vehicles needs to be replace by a new to us 3yr old model. I temporarily deal the cash card only to Car Purchase for 2-4 months, and then return to dealing only to Mortgage and Retirement.

    It’s a weird system but since we normally live on 55-60% of our income, we have excess every week and I want to get it moved immediately to where it can start to work. I see no reason to tuck away a few dollars a week for some future trip or car purchase in an account earning virtually no interest, when I can easily set that asside in 2-12 weeks depending what it is. Paying down the mortgage sooner or getting the money invested sooner are far more profitable than money sitting dormant waiting for a future trip or car. Neither or those is a desperate purchase. Travel is of course optional, and we have two cars. If one dies a little sooner than expected, we both have the luxury of being able to work from home part-time and we can share the other car until the money for the purchase is saved.

    • Afford Anything
      19. Nov, 2012 at 9:46 am #

      @JMK — You have awesome goals and a fantastic system. I very much share the same goals: I want to be financially free (I don’t want to “have” to work for money), and I also want to travel in the meantime. I realize that the money I spend on travel delays the amount of time it takes me to reach financial freedom, but that’s a tradeoff I’m willing to make, so that I can enjoy travel at all ages of life, not just later in life.

      Like you, my partner and I have been living on about 50-60 percent of our income. (We were aiming to live on 50 percent, but we won’t know the exact figures until the end of the year.) That helps us get to those goals faster.

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  1. One More Month Until the 2012 Investing Challenge Ends! | Afford Anything - 06. Nov, 2013

    […] this burnout, I’m proud of the steps Will and I have taken towards financial freedom. We both maxed out our Roth IRA’s. We paid $30,000 cash to repair two rental units. I sprinkled a few grand into Afford Anything. I […]

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