Part 3: The Landing Zone
The plane is gone. The air that was whooshing is no longer whooshing. The crumpled heap lying on the ground, thankfully, isn’t you - it’s your parachute. Although your heart is still beating rather firmly, the thrill of being at the mercy of earth’s gravity isn’t there. You made it. You have arrived. Congratulations.
How did you get here? You jumped out of a plane and ended up in your landing zone. You skillfully used those control lines to guide yourself to the L-Z.
Arriving At The Landing ZoneBudgeting is about knowing what you have coming in, and going out. Getting lined up with your LZ can be a complicated maneuver. Eliminating credit cards, or never getting them in the first place, is just one way to get lined up financially.
There are many highly creative ways to steer your spending so that one day you will be standing very close to where you intended.
One such way is to give your subscriptions a once-over. Amazon Prime is one of the most amazing digital shopping experiences of modern times. It’s inexpensive and thoroughly enjoyable, and makes shopping for stuff you were getting at big box stores much more convenient and fun. Then there’s their video service - might as well add that onto the sub. Combined, it adds up to about $20/month. Not bad…right?
But that’s probably not your only subscription. Most people today have multiple subscriptions, and a few bucks here and there can add up.
According to WestMonroe, the average American spends $237.33 per month on subscriptions (https://www.westmonroe.com/perspectives/point-of-view/americas-relationship-with-subscription-services).
The kicker: most of these, you select autopay, so it pops out of your account and all you get is a tiny blip in your email inbox. You don’t even feel it coming out.
The easiest way to handle this is to take a few moments and think through your subs. What are you using? What are you not using? Do you need the ultra-super-high-def-mega-4K offering, or does your kid do okay watching TV on the basic plan? Review your bank statement - it’s a good practice anyway - and cancel or modify what you can live without.
If you really need help steering, start looking into some other witty ideas that can snip off a buck. And make sure that buck you snipped goes to the right place in your budget when you're finished with the scissors.
Why You Need an L-ZAre you doing this to put the kids through college? Striving to pay off debt? Have you brought an aging parent into your home who can no longer take care of themselves? What is your motivation for doing this? That’s why you need an L-Z.
The thrill of the drop has worn off by now and you’re relishing the drift. As you steadily approach the ground, you have begun to guide yourself to a predetermined location. Once there, you will celebrate a life-changing experience, a risk worth taking, a journey you will recount to your friends and family for the rest of your life.
Get yourself to that moment, at any cost. Describe what that looks like for you, as clearly as you can, by writing it out, drawing a picture, or creating a video of it. Hang it on your refrigerator or put it somewhere within reach, and review it every time you work on your budget.
Jumping out of the plane is the beginning. Being on the ground is the end. Somewhere between, your budget needs to deploy and you need to guide your descent by gaining mastery over your spending.
When you arrive at your financial destination, you won’t regret the 14,000 foot drop. You’ll forever look back in awe, savoring the experience, grateful for the effort, and ready for the next adventure.
Part 2: Control Lines
So you’re falling.
But now that your chute has deployed, you’ve beaten nature at its game. The crisp, sudden sound of an enormous sheet of fabric has opened above you and slowed your speed.
As important as it is to arrest your descent, you should land in the right spot. How do you do that without ending up in someone’s swimming pool, or worse? There’s a lot working against you: wind, gravity, your body’s angle, etc.
But the amount of things that can take you off course after a jump from a plane are little in comparison to a financial nosedive. So how do you navigate all these things to get to your preferred financial “LZ”?
As you’re falling, you grab onto some cords, called control lines, and use them as you have practiced. They were a bit tricky at first but after some work you figured out how to guide yourself where you want to go.
How do you steer your finances so that, as you approach the end of your life, you land close to where you intended?
In financial terms, figuring out what your control lines are, and how to master them, takes practice. Some of the control lines we employ are banking apps, money-saving choices, retirement planning, and good spending habits.
The elements you’re fighting against are things like lack of self-control, laziness, and obviously bad spending habits.
Credit cards can also be one of those things. Not only can they steer you far off course, but they can destroy your budget entirely and bring you to financial ruin.
We all have heard stories of people finding the hidden benefits of credit cards. They exploit little known hacks to their advantage, getting fabulous vacations or free flights. But behind the flashy appeal is a lie.
Can some people use credit cards without ending up in debt up to their eyeballs? Sure. But why put yourself through that when you have everything you need to get it honest?
If you’re trying to prevent rips in your canopy, credit cards have sharp edges. If left unchecked, you will find yourself descending far more rapidly than you should like.
If you don’t have money to pay cash for it, that means you can’t afford it. That is a rock-solid financial rule that will help you avoid a lot of disasters.
Put any existing credit card debt under your canopy as a budget item. One day you’ll find yourself writing the last check. It's a great feeling.
In part 3 of this series, we’ll talk about Spending Mastery. I’ll give you some life hacks to save money and we’ll talk about the true motivation for knowing your landing zone.
You are falling.
The wind is whipping you about and it takes effort to keep yourself from spinning out of control. But you do it.
Now you are enjoying the descent - gazing in wonder at the world, at the horizon all about you. The fear, the panic, the nerves, all hammering at your guts, are still there. But they are now being drowned out by the thrill of the dive.
The feeling of dropping so fast makes you grateful you have something to slow all this down. Something to protect you from making this the final risk.
When the time is right, at the moment you were trained to do it, you pull the cord. The pilot chute pops out, quickly pulling the main canopy behind it, and the enormous sheet opens up above you.
As you drift lazily the rest of the way, guiding yourself toward your target, it dawns on you: this isn’t just you taking a risk, this is you being alive.
The financial world may not be as thrilling as skydiving, but it can help us think about things in a different light, and maybe it will help you start your journey toward managing your money in a way that makes you feel alive.
In this article we’re going to look at some financial components by comparing them to the parachute.
The Main Canopy
Budgets don’t go skydiving. But in our scenario, nothing else you do will be as effective without one.
A budget at its best will fit your personality, since it will take will power to manage it properly. There's no one simple and easy hack to creating a monthly budget. But there are also some great examples of what it can look like.
Let’s dive back into our metaphor to help us think about what a budget can do.
There are typically 2 strength measurements that matter for a parachute canopy: tensile strength and tear strength. You can really nerd out on the math with canopy fabric if you want, but let’s keep it simple. Compare it to financial terms this way:
tensile strength = income
tear strength = income - expenses.
How much income do you currently have? That’s the tensile strength of your budget.
How many expenses do you currently have in comparison to your income? That’s the tear strength of your budget.
How much force can your canopy (budget) handle on both of those measures?
If an enormous force is being imposed upon your budget, the ratio of income to expenses needs to change. If you are dealing with a lot of financial pressure (job loss, health difficulties, loss of a loved one, divorce, etc.), you will need more coming in than going out.
Keep in mind, that ratio can change in two directions: (1) increase your income, or (2) reduce your expenses.
Before you go looking for a new job or additional income, start with what you have. Nothing wrong with job hunting or firing up a side hustle. But it shouldn't be your first option. It could be an unnecessary stressor in an already stressful time of your life. Besides, most people discover they have better tear strength than they realized.
If you don’t know your financial tear strength, it’s time to change that.
Here's a very simple way to start your first budget (or re-think your current one!):
If you’re in the red:
If you end up with a big fat minus sign in front of that number, don't cry. I mean, it’s probably just some dust in your eye, so no worries. If you’re not shocked by this new revelation of being broke, maybe you can start seeing your brokeness in a new light. You have the data before you, and you can start taking action.
If you’re in the black:
If you end up with a positive number, congratulations. You have enough money to cover your expenses, but don't get all spendy just yet.
As a financial skydiver, you have the benefit of seeing the entire world laid before you. If you think about it, we only have so many years to generate active income. At some point, what we earn during our income-generating years will reach zero. To slow your descent to zero, or to have a ton leftover to pass on, you need a good parachute canopy. But there’s more gear that goes along with it, and it can be just as important.
In my next article, we’ll look at spending control and some money-saving tips.