Pay Yourself First: What’s Valuable To You?

“Pay yourself first.” – Robert Kiyosaki

Starting down a path of self-reflection is scary, and takes courage. For me, the rewards even in the short-term have made my life better. If you’ve started on this path, congratulate yourself: you’re doing some very hard, very valuable work.

A natural part of this journey requires reflecting on past habits, and for me there’s one that deserves particular attention: examining the things I buy and the things I own. In the past I’ve built up possessions as a defense or as a substitute. I tried to build a life out of objects, instead of actually building a life. I bought what I felt I should own, based on a fictional me that I felt others expected of me. But in reality, my friends weren’t interested in my possessions – they were much happier to spend time with the real me.

Attempting to build a life out of objects has some serious downsides, which I pay attention to daily. First, I don’t do a good job of evaluating costs or worth. Is an object really valuable to me, or is someone else defining its value? How will the purchase impact my finances? Second, I can be willfully blind to debt and to other issues. If I felt the fictional ideal I had created should own the object, cost didn’t matter – I bought it.

This is a bad trend: You get stuck in a mode where possessions beget more possessions. Debt follows. And with debt comes “buyer’s remorse”, a hollow feeling telling you what you need is not more possessions, but a more honest appraisal of what’s important to you. As you start the process of examining your own life, focus on building something meaningful. Then you’ll know when an object has meaning, because it will be integral to your life and its worth will come from you.

I haven’t become a minimalist, but when I moved recently I did a better job of evaluating the things I owned and the things I needed. For example: instead of buying a new cabinet to hold all my bathroom supplies, I simply got rid of a lot of them. Now I’m spending less on toiletries, and my bathroom feels more spacious. A small example, but if you extend it to every room of your house, you’ll find a very positive impact.

If you find yourself with too many possessions and too much debt, here are some ideas to help:

1) Evaluate your possessions.

Try to imagine owning the object before you buy it. If you feel that hollow regret, don’t buy it. And congratulate yourself on making a good decision, being true to yourself and not someone else’s idea of value. Also, evaluate the objects you do own. If you feel that regret, sell or donate them. You may not make back what you paid for the item, but having fewer possessions helps you get used to living more minimally, which helps you spend less going forward. It’s a positive feedback loop.

2) Evaluate your monthly costs.

Look at everything you spend for a whole month. Start small by trying to find $100 to save. Maybe you’re paying a lot for cable tv, maybe you’re having a lot of coffee or lunches out. I wouldn’t recommend giving things up entirely, because that may not work long-term. But what alternatives can you find? Can you bring your lunch one day a week? Could you try an HD antenna for your TV, and see what life is like with fewer channels?

3) Reduce your debt.

This is vital: Pay off your debt, as hard and as fast as you can. Paying interest is increasing the price of everything you own. Focus on the highest interest debt first, and pay it off as quickly as you can. While you’re doing this, avoid any spending that might contribute to your debt. This may require some short-term sacrifices (longer hours at work to make more money, less spending overall), but in the end avoiding paying interest is key to a healthy financial future.

4) Avoid debt.

If you don’t have any debt, congratulations, you’re in a great place. Avoid going into debt. One word of caution I’ve given to many friends: I entered an expensive graduate program without any thought to the debt I would incur. This was willfully ignorant on my part, and now I pay $500/month in student loans. Ask yourself if that sounds like good value. It may be, but make that decision consciously. Study the alternatives – would a state school provide a similar experience at less cost?

5) Budget.

Measurement is the key to improvement. Track your spending. There are good web tools like, but a simple spreadsheet can be just as effective. Calculate your net worth, and every month track it – you want it to go up every month and when it doesn’t, take a hard look at what you’ve spent. Create budgets and track against them, and take them seriously. This rigor will ensure a very healthy, happy financial future.

6) Build savings.

You want to increase your net worth, and a great way to do that is to save money in interest bearing accounts. Instead of paying interest to debt collectors and credit cards, use it in your favor, making your money grow. Invest in a 401k or other retirement plan – if your employer offers a matching program, take maximum advantage of it. You can also find checking accounts that offer interest, and tools like IRA’s to invest in to grow your money. Find a financial advisor you trust.

This isn’t easy work, and it can be scary. Like breaking down other walls, it requires moving outside your comfort zone and abandoning false principles. But once you start, you may find a new feeling: the satisfaction that you’re doing good work and ensuring a better future.

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