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Episode: 354 - Achieving Financial Success Through the Power of Small Wins

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Feeling like you're facing an insurmountable challenge when it comes to managing your money? You're not alone. Financial freedom can seem like a daunting mountain peak when you first start, but the secret to reaching the top lies in the power of small wins. Embracing these little victories is key to feeling better about your finances today, not someday in the distant future. 

 

Why Small Wins Matter 

Small wins may seem insignificant on their own, but they hold the potential to bring about monumental change. It’s all about building confidence and momentum. Instead of feeling overwhelmed by the sheer size of your debt, start focusing on those small victories that can help you regain control. By reversing the accumulation of debt with positive financial decisions, you’re setting yourself on a path to success. 

Turning Mistakes into Motivation 

Recognizing the impact of your small financial mistakes, like unnecessary daily expenses, is crucial. It’s these tiny, often overlooked choices that can lead to a significant pile of debt. By acknowledging them, you can shift your strategy to small, positive changes that ultimately contribute to paying off your debts. Replace those small missteps with deliberate, good decisions. 

The Compound Effect: A Simple Yet Powerful Concept 

The magic of small wins is beautifully encapsulated in the concept of the compound effect. This principle explains how repeated, small actions can lead to substantial outcomes over time. Whether it's saving a few extra dollars a week or avoiding a tempting shopping spree, each decision accumulates into a greater financial achievement. 

Building Consistency and Tracking Progress 

Achieving financial success isn’t just about making the right choices; it’s about building consistency. Celebrate every small accomplishment, whether it’s sticking to your budget or reducing your expenses. Tracking these wins not only motivates you but also provides tangible evidence of your progress, helping you stay committed even during challenging times. 

Real-Life Examples of Small Wins 

Here are some actionable examples demonstrating how small triumphs can lead to larger financial success: 

Track Your Spending: Become aware of your spending habits by recording them for a week. This awareness can lead to significant, positive changes in your budgeting strategy. 

Save Where You Can: Strive to save a little extra each month, even if it’s modest amounts. Every bit counts towards building a more secure financial future. 

Focus on Debt Reduction: Prioritize paying off smaller debts first, generating a snowball effect that can assist in tackling larger debts over time. 

Celebrate Avoidance of Unnecessary Spending: Skipping frivolous expenses, like impulse buys, is a win. It’s these conscious decisions that keep your financial goals on track. 

Final Thoughts: Empowerment Through Small Victories 

The journey to financial freedom is not just about the destination but the steps you take each day. Start by identifying small, achievable goals and celebrate your wins along the way. By cultivating this habit, you’re not just reducing debt, but also transforming your financial mindset and building a more empowered future. Remember, each small win is a stepping stone toward the ultimate goal of financial stability and peace. 


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Transcript

 Brad Nelson:  

Have you ever felt like fixing your finances is this huge, overwhelming mountain you'll never be able to climb? Like no matter how hard you try, it's never enough to feel like you're really getting ahead. Here's the truth Big changes start with small wins. So in today's episode, we're gonna be talking about why those tiny steps and tiny wins matter so much and how they're the key to feeling better about your money right now. Not someday, but today. Whether you're trying to save more, pay off debt or just stop feeling stuck, this episode is gonna help you see how small wins can add up to big results.

Announcer:  

You're listening to the Debt-Free Dad Podcast with Brad Nelson. Brad and his co-hosts experience the anxiety of living paycheck to paycheck before learning the fundamentals of financial success. They are now on a mission to empower regular people to pay off their debt for good and enjoy happier, less stressful lives. Keep listening for inspirational interviews, tips, tricks and practical advice to gain financial freedom.

Brad Nelson:  

Hey guys, welcome to today's show. My name is Brad Nelson. I'm the founder of Debt Free Dad. I paid off about $45,000 of debt and I've been debt free now for more than 12 years. I've also helped thousands of other people save and pay off tens of millions of dollars with the work that we do here at Debt Free Dad.

Chris Hawkins:  

And my name is Chris Hawkins, and my wife and I began our journey back in 2005. We're coming up on almost 20 years of doing this, and we have been debt-free since 2008.

Kati Hatfield:  

And I'm Katie Hatfield and I am still paying off my debt and getting to debt freedom and in the last seven years, on a single income, I have paid off $222,604 in debt and saved so much more.

Ryan Nelson:  

And my name is Ryan Nelson. My wife and I paid off $160,000 over eight years while we were raising three kids.

Brad Nelson:  

So after listening to this episode, if you are ready to take things to the next level. You want to break free from living paycheck to paycheck, you want to reduce financial stress, you want to build savings and finally pay off your debt for good, but maybe you're not sure where to start. We've created some incredible free resources here at Debt-Free Dad to help you get there, and we'll be sharing some details about those later on in today's episode. So, guys, today I love this topic.

Brad Nelson:  

Probably one of my most favorite things to talk about when it comes to finances is the power of small wins and one of my favorite books I shouldn't say it is my favorite book. I've read it tons of times, I've listened to the audio tons of times, and it's called the Compound Effect by Darren Hardy, and it's not a very long book, but it literally you can take this thing and apply it to everything in your life. And the whole book, the whole thing, is about this idea of the power of small wins. And one of the quotes that Darren Hardy has and I wanted to share this here as we kick off the episode he says it's not the big things that add up in the end, it's the hundreds, thousands or millions of little things that separate the ordinary from the extraordinary.

Brad Nelson:  

That's just so true, and I think that's one of the things that keeps a lot of people from getting started is that they sometimes will sit back, and I know I did this. You look at the mountain you have to climb right and you look at this huge thing and it's like how am I ever going to do that? It feels so intimidating and it makes you just feel stuck and you don't even want to do it right? So what a lot of us do and you guys can probably talk about this, you know, we stick our heads in the sand and we just ignore it We'll figure that out later because it's just this huge monster that you don't even want to deal with.

Ryan Nelson:  

I know we're talking about small wins today, but when you look at your debt, especially when you first add everything up and you just get a visual of where you're at and it's super scary and you're like, oh my gosh, I'm never going to get out of this. I think sometimes what we forget, just like small wins add up, those small little mistakes that you've been doing over the past 20 years, 30 years, those also add up. And it's the same concept. We don't think of the $5 here, the $10 here, the $50 a month here. None of that matters until we're in this position where now it's like, oh my gosh, we've got this huge pile of debt and we're never going to get out. And the way you're going to get out is the same way you got in it's just by small wins. Except we're going to just do it in reverse Instead of making small bad decisions, we're going to make small good decisions, and we're going to just keep doing that over and over and over again.

Chris Hawkins:  

Yeah, one of my favorite quotes from Ben Franklin is small leaks sink great ships, so it doesn't have to be something big, it's always the little little things or death by a thousand cuts. And so, yeah, the opposite of that, obviously, is how you get out of debt. It's the little things that put you there. It's the little things that are going to get you out. I do want to reiterate, if you're listening to this podcast, the Compound Effect is also one of my favorite books. I give it to people as gifts all the time and it mentions and they're the same thing that Ryan just talked about is you are the culmination of all the little decisions that you've made. Okay, and most of those decisions are small, they're not big ones, so they challenge you. In the book he does if you remember this, brad to identify the two or three things that put you in that position and then what are two or three positive things that you can do to get out of that? And this is a simple book on stop doing these three things and start doing these three things and do them consistently over a long period of time, and you will undo all the bad things that you've done, sometimes at a much quicker timeframe than you did when you got there. So I'm a big fan of the small wins. That's exactly how you're going to get out of debt. That's exactly how you're going to build wealth, and it makes it fun when you can.

Chris Hawkins:  

You know $10 here, $20 there. It seems like it's a small number but it's like, yes, there's another $10 to put towards that debt. There's another $15. Or I decided to eat at home tonight instead of eating out and save that $15, $20. It was $15 back when we were trying to get out of debt. Now it's probably more like $40 to go out and eat for two people. But you get the point. Small things. But go get the book the Compound Effect, order it on Amazon. Go to Barnes Noble local bookstore, get it. And when he tells you to do some exercises, to do some thinking and write some stuff down on paper, do it. Yeah.

Kati Hatfield:  

I would say I definitely would not have stuck around for seven years and paid off over $222,000 in debt if I wasn't tracking all the little wins along the way, because I still look at that number and go how? How did that happen? How have I been able to make that much of an impact on something that stressed me out for 35 years? So yeah, every little small thing does add up quickly and we've said on the show a number of times in order to waste $10,000 in a year, you only have to spend about $28 a day at the coffee and lunch and dinner at the drive-thru. Easily. If you were finding $25 to put away in savings, you could have $10,000 saved in a year.

Brad Nelson:  

I went to Jimmy John's today, by the way, $26 and some change for two sandwiches, a bag of chips and two sodas. I was like, oh my, I don't eat out that much. So that's just like. Oh my gosh. And my son always makes fun of me. He's like is this the first time you've ever been out of the house? It's crazy, but it's true. I think.

Brad Nelson:  

Why small wins? I think the biggest reason why they're so important is because it builds confidence and it builds momentum, and so many people, obviously, when they're starting to get a debt, they're starting to improve their finances. We have none. We have no confidence, we have no momentum, because we're so used to always playing defense and getting our teeth kicked in all the time. Right, we're constantly hit by this crisis or this bill or this one, and it never feels like we're actually able to really do anything meaningful. And when you're constantly getting beat down all the time, it just feels like you're not getting anywhere. So that's why doing one little thing, one win, just in focusing on that, that's one of the reasons on this show, we have the celebrations of the show at the end. That's the reason, you guys, because those small wins are just so important. And the other thing, too, is a lot of people, because of these small wins, because it starts to build confidence, because it starts to build momentum, it starts to become a little bit more fun. We've even had people say they're addicted to now paying off debt, like they cannot wait to pay off the next one. Because it's this huge feeling, it's an awesome feeling that they get to check something off, because psychologically, your brain loves to see that progress, even if it's just a little bit, and that's one of the reasons why I think, for instance, the tool that we always teach is the debt snowball. I think that's why it's the most effective From a psychological standpoint. You're seeing progress, you're checking things off.

Brad Nelson:  

Like Chris, you mentioned building wealth. You don't build wealth overnight. Most people don't inherit it, win the lottery or do anything like that. Most millionaires are self-made and it's made by putting money away every single month. Not a huge chunk all the time, but putting away 10%, 15%, 20% of their income, maybe more, depending on what their situation is, and just putting that money away every single month and when they first start the compound interest that they're building, it doesn't look like much. In fact, you might even say this isn't even worth it. But if you look at it from 20, 30, 40 years from now, it's at the end where it starts to explode.

Brad Nelson:  

And someone might say, well, they're an overnight success, they're a self-made millionaire, but they don't see the years of discipline that it took them. All those little tiny wins that happened basically summed up this huge amount of wealth that they've now built. And you hear these stories all the time about these little old ladies that pass away. No one ever knew that they had all of this money Millionaires you never would have known it, but a lot of them again. It just came from consistency putting away money every single month, stacking their small wins and eventually have this huge win. It's incredible.

Ryan Nelson:  

People that do this, that share their small wins, and a lot of times you'll see at the beginning, when they first start sharing I know it's not a big deal, but I was able to save $50 this month and you'll look at those people in 12 or 18 or 24 months and what started off as, oh, this isn't a big deal, it just starts to snowball on itself and suddenly those people are like I've paid off $20,000 in debt and I've saved $5,000. Because sometimes when you reduce to share those celebrations, I think people listening like, oh, they saved 100 bucks. Wow, that doesn't seem like a lot. Well, it's consistently. You keep doing that and suddenly over 24, 36, 48 months in Katie's case, seven years it adds up to $222,000. So it's like, yeah, at the beginning it might not seem like a big deal, but you do it consistently over a period of time and boom, it adds up and you start to capitalize on it over and over again.

Kati Hatfield:  

Right, I also love the snowball stickers that are in the debt-free dad in Roots and the planner, because stickers are fun and when you see all those stickers on there it's like gold star for me this week. And little things add up because for about five years I had been putting away just $50 a month in a Roth IRA and I stopped because I was getting out of debt so I stopped investing. That account is now $17,000 plus and I was like, oh wow, I guess the compound effect does really add up over time. And now that I am getting out of debt more and have decided I also need to start reinvesting again, it's just going to grow that much because I still have, hopefully, 20 years left before retirement and 20 years is a good period to get that compound interest.

Chris Hawkins:  

I definitely was one that gamified it big time. I've talked about that on this podcast. I've even done a couple of individual podcasts on this subject about gamifying your debt, because we all like to win, we all like to play games, and here's the cool thing is, you can sort of set the game up the way that you want it. So don't think of it as $100,000 worth of debt. Maybe think of it as I've just got to come up with a hundred ways to come up with a thousand dollars. If you can make the numbers smaller, they're much more achievable. Or I've got to come up with a thousand ways to come up with a hundred dollars and you go okay, I can come up with a hundred dollars.

Chris Hawkins:  

That's not that difficult, and that's why, for me, I was always so excited when my food envelope had money left over at the end of the pay period because that was more money to go towards a debt, and so I treated every dollar as if it was a point in a game, and I keep doing that. I still do that to this day, even though I have no debt. It's just on the positive side now, and I am a testament that small things, whether you're getting out of debt or whether you're building wealth. You can do tremendous, tremendous things by just doing it a little bit at a time.

Brad Nelson:  

Yeah, chris, you brought up point system. Katie, you brought up stickers. I think this is where the value really comes from Not only focusing on small wins, but also tracking those small wins too. And this is so important in just every area of your life, like, for instance, in this business. I mean, we've been working hard at trying to grow this business and we're just at like this stall point. I'll tell you guys honestly, it's frustrating.

Brad Nelson:  

Ryan and I Amber, we're working full-time here on Debt Free Dad, trying to get this thing to go. We want more members. We're pushing and pushing and sometimes you don't get the results that you want to see and it gets frustrating. We've had some hard days, right, and it's like getting out of debt. I look at it like getting out of debt. It's not always going to go perfect, it's not. You're going to have some hard days, you're going to have some hard weeks. You're going to have some hard months sometimes, and if you don't have any proof of progress like you haven't been tracking your small wins if you don't have something, like Katie said, I can go back to my debt freedom success path kit that she got when she joined Roots, like with all of her debt snowball stickers. I'm just, I'm just in a tough spot right now, like things are going to move in the direction that we want them to.

Brad Nelson:  

It's unfortunately just not happening in the time that I want it to, right, and so it could be easy, without any tracking, to say I'm going to throw in the towel, like we're going to quit, we're going to give up because this isn't working. That's not necessarily true, right? Maybe you just have to shift your mindset, maybe you have to do something different, right? Maybe you have to get drastic and make some bigger changes in your life to get money moving, to free up cashflow, to start making better progress, but without any proof of progress, it's easy just to say this isn't working, I give up, but meanwhile you have been making progress. And this is where a lot of people kind of get in the cycle of this constant. You know, fits and starts. Right, they'll start, they're doing good for a while, something bad happens, they stop, then they get the energy to start again and then they stop right, and it's just back and forth and they never really make the progress that they want because they're not really tracking their progress very well.

Kati Hatfield:  

And I would say when I started getting into Roots, I didn't have any savings. So getting that first $1,000 in a savings account was a huge, huge success for me, because I'm like wait, I've never had a savings account like this. This has a comma in it. Come on guys, this doesn't happen to me, and now I've been putting away for seven years, $100 a month from my paycheck Just automatically goes off into savings, so I have more than two months worth of income. So if something did happen, I'm not like, oh my gosh, I have to run out and get a new job immediately. I have a little bit of a cushion. I don't have to make any drastic decisions. It's so much less stressful and things that used to be emergencies and crisis that's not the case anymore, which is huge.

Brad Nelson:  

So here are some just real examples of small wins, right? Obviously, if you guys have been listening to the podcast, you listen to our celebrations on every show. But here are some ideas and, like Ryan specifically said, the most important thing when you're focusing on your small wins is don't poo poo on any win. Just don't do it. Don't say I only saved or I only was able to pay off this much debt, all right, that ain't going to work.

Brad Nelson:  

You have to flip your mindset to a more positive one. Like I did get to pay off this much debt, all right. I was successful in saving this much money, no matter what it was. But things like tracking your spending for a week is a great win. You're going to learn a lot about your spending habits. Saving an extra 20 bucks from your grocery budget just like Chris said you know at the end of his envelope it was the end of the month. He had money left over that's a great win. He could take that money, put it into his emergency fund or pay off extra debt. I mean, that's something you should celebrate. Making, obviously, one extra debt payment or making more of a payment on your snowball list Awesome win, right? Selling something you don't use to add to your emergency fund. So looking around your house, getting stuff put on Facebook marketplace focusing on income producing activities All of these things add up to big wins later. Any that you guys want to add that you can remember from very early on that felt great.

Chris Hawkins:  

Well, it's even things like just getting better at budgeting or just hey, I did another budget. You know, changing how I did things, how I budget now and how I budgeted when I first got started are completely different. But had I done the budgeting the way I do it now, then it may not have worked. Does that make sense? So you constantly learn and grow. I think it budgeting the way I do it now, then it may not have worked. Does that make sense? So you constantly learn and grow? I think is the big thing and just one small change to how you budget and going yeah, that worked, that's going to pay off in the long run. So sometimes it's the little things that are the mental part, not just the numbers.

Kati Hatfield:  

I remember my small wins were not going to target. That was a big win for me, because going to target meant spending a lot of money that I didn't need to spend, and not going to target was a win.

Brad Nelson:  

So one other point I do want to bring up, too, is that when you're focusing on small wins that you want to work on, focus on something you can achieve as well, especially when you're first getting started. Focus on things that you know you could get that done. Make it a little bit of a stretch at the same time. For instance, we tell people one of the first things that you should do before you pay off any debt is to build an emergency fund. We suggest $1,000 to $3,000. And we tell our roots members we want you to get it done in the first 30 to 60 days. And for some people that freaks them out a little bit, because it's like Brad, I can't even save 50 bucks. Like you want me to get a thousand to $3,000 in the next 30 to 60 days. I'm never going to be able to do that. The point of the deadline is to create urgency, right. So we want to stretch you a little bit, we want to get you a little bit out of your comfort zone, but at the same time, we also want to make sure that it's something that you can achieve, because once you achieve it, it feels really freaking good when you make that happen. So make sure whatever you decide to pick like if it is tracking your expenses for weeks, saving a certain amount of money, maybe it's paying off a small credit card, maybe it's paying cash for a purchase, I don't care what it is Just make sure that you pick something that you can achieve and put a deadline to it so it creates some urgency, because without urgency, you're not going to be really willing to take any action right, and without action you ain't going to get any results. So focus on what you can achieve and again track all of those small wins, because they're going to add up over time.

Brad Nelson:  

All right, guys, if you're ready to break free from living paycheck to paycheck, you want to reduce financial stress, build savings and finally pay off debt for good. But again, maybe you're not sure where to start. Don't worry, we've got you covered. Simplify my Money is sent to you each and every Sunday to your email. It is your step-by-step roadmap to better financial control. You're also going to learn easy-to-follow strategies to manage your money more effectively stress-free money decisions that are going to help you simplify your financial life with proven tips that actually work for normal people, and you're going to gain the tools and confidence to tackle your financial goals head-on. You can sign up for Simplify my Money by good things all the bad things that may be.

Chris Hawkins:  

Let's talk about death. Let's talk about death. Tune into a death-free death.

Brad Nelson:  

Tune into a death-free death. All right, that's all means it's time for the celebrations of the show, and we're kicking off with Nick. This is a great win for today's topic. Made it through the week using only envelope system, just like you, Chris, Everything was paid in cash. He says incredible feeling. And Nick man, they've been taking some serious action over the last few months since getting started Just having some awesome, awesome wins. So great job, Nick.

Chris Hawkins:  

And Tara says that she was finally able to work some overtime to make a few extra dollars and this will become a regular thing now because she needs to tackle that last debt, which is her car.

Brad Nelson:  

Yeah, awesome Way to go Tara.

Kati Hatfield:  

And Mary has put $160 in her sinking funds, $90 to her health account, $50 for Christmas fund Way to plan ahead, mary and $640 to more debt Plus. She has the cash available to send her daughter off to stay with her cousins.

Brad Nelson:  

Yeah, and I love this win because she takes her time and focuses on everything that she got done that week and it's awesome.

Ryan Nelson:  

This is just an awesome win list, great job and, Suzanne, I was looking over our electric bill and found new rate options on the company website. We can now switch to a flat rate option. That will save us about 85 to $100 a year.

Brad Nelson:  

Yeah that's awesome, suzanne. And then I got one more page page says she worked overtime the last few weeks to make up for not having any dog sitting jobs this month. So again focusing on those income producing activities Love, love, those wins. And, as always, guys, congratulations to all of you guys who are taking a stand for your financial life and you're wanting better. Hey, we get that. Getting out of debt. It's not easy, but with our help and with your consistency and discipline, we promise you guys, this will be some of the best work that you guys do in your entire life. Thanks for joining us on today's show and we will see you guys on the next episode.

Announcer:  

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