The Simple Systems to Kicking Monetary Ass

The often-touted rule-of-thumb for achieving financial independence is to secure 25 times one’s annual expenses via intentional saving and investing. Even though these are simple systems, we know from the second or third grade that multiplying things by 25 produces much bigger numbers than the thing itself (our spending in this case). Therefore, it seems absolutely outlandish to imagine saving that much money! Outlandish, I tell you!

So, as with many difficult endeavors in life, the tendency is to focus too narrowly on the distant target, and then immediately get overwhelmed. And in doing so, we may never start in the first place. Behaviors remain unchanged; the status quo is preserved.

How can a series of simple systems be implemented to change our lives forever?

Climbers Have Systems for Climbing

I’ve been amazed at some of the incredible climbers that have crossed my path. I know folks who meticulously plot out a series of stepping stones over years of effort, all in the pursuit of a grander goal. Detailed training plans are created, and laser focus is employed to address physical and technical weaknesses. Calories are occasionally counted, and beers are left to expire, huddled sadly in a forgotten sticky corner of that disgusting refrigerator.

Shockingly, however, when it comes to something as important as money—something that will inevitably follow us to the grave—we dismiss it as a distant-tier priority. We consider money only as something we need to get us through the next rent payment or next couple of months on the road.

We wrongly believe that there isn’t a world where passion and financial strength collide. This misconception was my impetus for the first four posts of this website back in 2018:

The Goal of Clipping Chains: Linking Up Personal Finance and the Rock Climbing World

Having Your Cake and Eating it Too: The Millionaire Dirtbag, Part 1 and Part 2 and Part 3

Creating Systems Outside of Climbing

Why do so few apply the beautiful and precious gifts of curiosity, optimization, grit, and growth mindset to their personal finances?

We place so many limiting beliefs on the ways we spend and the income sources we secure. We refuse to challenge the ways we think about money. Or worst yet, some take the dreaded stance of the cynic, conflating wealth with greed and other negative connotations.

However, by choosing a stance on financial modesty, are we unintentionally shifting the burden of our financial security to our loved ones, friends, or society at large?

If we want to discuss privilege, as I’m apt to do, perhaps we should discuss the privilege of someone else paying our bills for us.

Small Bites

Jenny is at the base of a route, craning her neck to take in a spectacular 95-foot pitch. There’s nowhere to hide on this monster, with a series of stacked boulder problems and just a few decent rests. But shit man, even the rests aren’t rests! The hands are good, but the feet are tucked back under the overhand and are non-positive, requiring a high degree of core tension.

To make matters worse, the route’s crux—which comes right off the best rest jug—guards the chains. The clipping hold is a greasy sloper too! Jenny must rest and regroup at 87 feet, knowing how hard she has worked to get here, mentally preparing not to squash the banana in the final eight feet. At first, Jenny falls all over this thing, her ego huddled in a corner like Gollum, while she tells herself…

This is part of the process.

I’m fine. Everything is fine.

This is a daunting goal. Why not go climb a handful of moderates and have fun?

The Small Chunk Systems

But we know the process, right? We break it down move-by-move in small chunks. Moves become sequences, and sequences become boulder problems. Then we link them, ideally from the top down. We wire the crux, being mindful not to overlook the easier sections. Little by little, like Michelangelo, we carve and sculpt our own little David*.

And then one day, as the wind picks up and the leaves rustle in the trees, Jenny steps off the ground and she doesn’t stop moving until she slumps euphorically in her harness at the chains. Clipping chains!

The goal can be daunting. It’s all about the systems and process of getting there.

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*True story alert: A former neighbor had a really dumb and ugly, but extremely lovable dog named David. He would mine El Chapo tunnels under our fence every day while we were at work. I’d come home to find his lovably stupid ass in our house with our dog (we have a doggy door), his tail wagging so hard he would knock himself over. Damnit, David!!

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“Winners and losers have the same goals.”

James Clear, Atomic Habits

 Ignore the Goal

Every athlete wants to be a champion. Every politician wants to get elected. We all want a seven-figure net worth. We all want to send hard routes and boulders.

Everyone has goals, but not all of us will achieve them.

Sometimes that’s on us, and sometimes that’s the universe throwing turd sandwiches at us.

While goals are important, they are non-unique. What really matters is the systems we put in place to achieve those goals. Nowhere is this truer than with personal finance. After all, it’s a series of simple systems.

Often a firm belief of possibility is enough to get the machine rolling.

The Simple Systems

It’s a system, and we should treat it as such. Motivation is like a desert wash, raging and full of life-providing water after a mid-summer monsoon, but otherwise trickling or bone dry for much of the year. We can’t rely on ephemeral inspiration to achieve our goals. We rely instead on taking action to move beyond inspiration. With these small actions, we create simple systems, some of which can be completely automated.

System #1: Track Spending

We track our spending about twice a month in an excel spreadsheet. Get our free tracking template by subscribing to this website, which is also free.

System #2: Scrutinize Spending for Waste

I’ve yet to see a spending profile that doesn’t involve one of the following (we are no saints here either):

Downright heaping waste

Just utter crap. Knee-jerk reaction spending that provides no value beyond the initial dopamine hit. This stuff is probably under a tarp in your garage, stuffed in a closet, or worse yet, in a storage facility!

Overpaying for essentials

We all need a smartphone it seems these days, but is there a real reason for unlimited data? Can the YouTube video wait until you are home on Wi-Fi? Have you run a quote on car or home insurance, or other recurring bills in the last year? If not, I 100% guarantee you are overpaying, month after month after month.

(Related Post: Five “Essentials” That Are Destroying Your Savings”)

Eating out excessively for convenience

I maintain that restaurants are beautiful sanctuaries of experience and shared community. But buying multiple meals out a week, especially alone in a drive-thru, might be a feverish symptom of poor time management or mismanaged stress.

(Related Post: But There’s No Time to Save Money!)

FOMO spending

Everyone is buying a van! I want a van! I know, I know, I risk alienating half of the climbing community with this one. My stance is by no means anti-van (I’m living on the road for god’s sakes!). This van life economics post above shows how it can be good economics. However…a staggering debt is a staggering debt. Especially if said van mostly sits in front of your other, larger, more comfortable permanent place of residence.

There are countless examples of FOMO spending.

The Big Three

In the end, most people are blowing the budget mostly in three categories: housing, transportation, and food. Adjustments here will be most impactful in moving the needle.

Savings Rate

With extra scrutiny on your spending, you will naturally begin to save more. The chart below highlights the incredible power of increasing your savings rate.

System #3: Track Net Worth

We track our net worth on the same above-mentioned spreadsheet once per month. It’s actually fun to go and open all of our accounts and see the progress. One simply tallies all assets and debts, and the result is net worth.

System #4: Automatic Contributions to Investment Accounts

As savings increase, set automatic contributions to investment accounts. Build the system that works while you sleep. While you are gut-laughing at your wife throwing rosé into her own hair because a fly buzzed her nose (true story), robots are investing in your future at your instruction. It’s a beautiful thing.

(Related Post: Our Investment Strategy, Part 1 and Part 2)

You will have to build the system and get it running. But then kick back and enjoy the fruits of your limited labor.

Keep Showing Up

Everyone was a great investor until about mid-February of 2020. Then the sky fell.

It’s easy to get smug and overly confident in the kind of raging bull market we witnessed from March of 2009 until February of this year. You can invest in damn-near anything and make money.

The sky is the limit.

But as we saw in the 2008 financial crisis, and then of course in the first quarter of 2020, the universe can open a trap door and throw everything into a tailspin.

Tried-and-true systems become a psychological burden to maintain. Red stock tickets dominate the headlines. Investment gurus warn of the big one. This time is different. Automation and deposits into investment accounts carry an essence of violins, deck chairs, and Titanics, as they say.

Investors are forged in market downturns, especially those of the magnitude witnessed in 2008 and 2020. Those who resist the pull of every voice in the room to rush for cash or engage in market timing, the admittedly strong desire—but near impossibility—to sell high and buy low, will be left standing when the dust settles.

And then the storm is over. Blue skies prevail…until the next time.

There will always be a next time. So put the systems in place and keep them there.

Summary

It’s incredibly easy to get lost in grandiose visions and assume that the distant goal is too big. As athletes in general and climbers in particular, we know that it’s often our systems—not our goals—that enable us to progress.

So, it begs the question: why not apply that same methodology to our finances?

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