Exploring zooming in/out, investment cost, and paying down debt

Welcome to the Intentional Dollar weekly newsletter — great work taking this small step to move your money forward. I’m Logan, a Certified Financial Planner™, and I’m excited you’re here!

What’s inside?

• One tool to experiment with

• Two quotes from others

• Three questions to dig deeper

• Four lines of poetry for the point

_{One tool to experiment with:}

Zooming in/out:

How often are you switching your perspectives? Not just thinking from someone else’s perspective, but changing the distance from which you view your challenge — zooming in and zooming out.

When you are working on a puzzle you typically “zoom in” to see the deep details resting in a piece. But when you complete the puzzle, or plan your strategy for allocating the individual pieces, you “zoom out” to look at the full picture — like a map.

This map is a broad guide to your journey — enabling you to see how the small things connect into the big things.

Money is an area where we don’t often oscillate our eyes to see near and far. This requires us to intentionally deploy a device to facilitate the benefits of this perspective change.

When should we zoom out?

Zooming out is beneficial when we’re hyper-focused on the “negative now.” The negative now represents all the little things that serve as friction points to good current action. Money is emotional, so this requires us to constantly manage our psychology and behavior.

“These dismal monthly savings won’t get me to retirement.”

“The economy is terrible, there is no way I am investing money now!”

We might be zoomed in on the current economic uncertainty: the high interest rates, soaring inflation, and rising unemployment, so we’re scared to invest our dollars. In reality, if our investment time horizon is 10+ years, it does not matter what happens this year — this requires us to “zoom out.” When we shudder in our myopic views, we lock our future selves out of the benefits of long-term compounding.

Saving $100/month doesn’t seem like much for the first few years. This often leads to discouragement and abandonment of the plan. However — if you zoom out and see the long-term impact of staying with this, you’ll be amazed.

What does investing $100/month at 10% look like across time?

Year 1: $1,256.56 —> you saved $1,200; earned $56.56

Year 5: $7,743.71 —> you saved $6,000; earned $1,743.71

Year 10: $20,484.50 —> you saved $12,000; earned $8,484.50

Year 20: $75,936.88 —> you saved $24,000; earned $51,936.88

Year 30: $226,048.79 —> you saved $36,000; earned $190,048.79

When should we zoom in?

At times, we know what the big picture looks like — and it’s overwhelming. This clouds our vision and we can’t zoom in to see the individual pieces.

“I see the pile of debt, but not the steps to payoff.”

“I see the amount of money I need for retirement, but no path to get there.”

Think of zooming in for this approach as being a magnet for small actions. You are attempting to aggregate the little pixels that will create the larger image.

Let’s dive in on the debt example:

“I see the pile of debt, but not the path to payoff.” This is a zoomed-out perspective; you can start zooming in through careful questions:

• What would my monthly payment look like to pay this off over five years?

• What if I took inventory of my debt and sorted it by highest rate to lowest rate?

• What if I aggressively attacked high interest rate debt first?

Each question gets you closer to the detailed steps you can take today to form the path to payoff.

Zooming in might lead you to realize that the debt avalanche is the best approach for you to reach your goals; perhaps it’s through the momentum-building debt snowball technique. Check here to learn more about the two strategies.

The goal with this framework is to help you work through mental bottlenecks; to remind you to zoom in for the pixels and zoom out for the picture.

_{Two quotes on investment cost:}

The embedded cost of your investments is extremely important. These costs compound against you and erode your financial assets over time.

_{Three questions on paying down debt:}

1. Why do I feel the need to get a new car after paying my current car loan off?

2. What’s the interest rate on this debt, and should I pay it all off now, or is there a better return elsewhere? (high yield savings accounts, I’m looking at you!)

3. Am I borrowing money based off future income expectations, or current financial means?

Which question stuck with you? Questions like these are spotlights for the mind. Reply to this email and let me know which one shined light on a previously dark cave.

_{Four lines of poetry for the point:}

Contact Me:

Content ideas, questions? Reply to this email or reach out to me at [email protected]