Last week I wrote about Fundamental vs Significant, but only gave a single, simplified example of how that distinction can clarify a complex information landscape. Let’s examine this more deeply with a peek into our everyday lives to a place where you likely have your own experiences of complex prioritization – Debt Management. If you aren’t curious enough about this particular distinction or debt management in general then this is a good point to get off this bus. :)

First, a quick recap of Fundamental vs Significant. This distinction is often helpful to bring to bear when you have a list of multiple things or goals that are “important.” The Fundamental items are important in that they are the building blocks, the non-negotiable, the first things first items. These are “important” because without them taken care of we can’t really do anything else. The Significant items are the end goals, the desired outcomes, or things that answer the “why” questions. These are often the whole point of orienting towards the list in the first place.

Approaches to Debt Management is a great place to tease these out a bit more. Most people have a variety of debt strung out over multiple accounts. Between home, auto, student loans, and credit cards, the average American is almost $97,000 in debt according to 2022 statistics. That’s a lot of money! The goal of managing this debt is a great place to explore the priority landscape and various ways to approach it, especially because it combines the rational and emotional aspects of ourselves in very powerful ways.

 A common refrain I hear from my clients that are struggling with Debt Management is that it all just feels overwhelming, regardless of their overall financial status. They are lost in the swirl of minimum payments, interest rates, and due dates. Compounding this confusing monthly carousel of changing numbers is their own fluctuating emotional relationship to it all leading to disjointed and ultimately ineffective attempts to address it. Their long running goal of “getting on the other side of money” remains elusive, and further recedes over the horizon with each new billing cycle. “I want to get off this terrible monthly ride but I don’t even know where to start.” So they keep all their debt on minimum payment autopay (much to the banks’ delight, FYI) and just keep pushing it off to “later.”

 But one day they finally decide “later” has arrived. They are ready to begin tackling their larger debt challenges head on, but where to start? What’s the path forward to change their relationship to debt? Not necessarily getting out of debt entirely, but at least getting it under control and to a place where they feel good about it. More importantly, getting to a place where they feel good about themselves in their relationship with money.

 Managing a complex priority landscapes like Debt Management a perfect place to illustrate the value of the Fundamental vs Significant filtering lens. Both as a first step, and also at many other steps further into the process. Done well, applying this lens can greatly clarify the terrain. From this perspective of increased clarity the priorities can almost organize themselves into a coherent framework producing clear action plans for their realization.

 We’ll begin by first trying to identify the specific Significant goal that really resonates with the motivational engine of determination, a goal that runs on emotion aligned with intention. On the surface the initial emotions that come up in conversations with my clients usually hit the same deep and powerful chords. “I’m tired of being afraid” or “I’m letting down my family” or “I’m simply ashamed I let things get this bad.” Underneath the surface we can see the common theme of “I keep failing at this and it feels really bad.” From here the Significant emotional goal we want to orient towards becomes apparent – “I am succeeding at this and it feels really good.” With this Significant emotionally grounded priority in hand we now turn our attention over to identifying the Fundamental specifics in play.

 Obviously, the main Fundamental need is “extra money to be applied to debt,” but if this was already present then we probably wouldn’t be having this conversation in the first place. So now the Fundamental ingredient for achieving our Significance goal of feeling good while succeeding in debt management shifts over to finding “extra money to be applied to debt.”

 Finding “extra money” resonates with my previous piece on finding extra time. Neither time nor money randomly accumulate throughout the day in ways where we can simply grab them and put them to use. Like time, “extra money” must be made. Either by doing extra work, like taking on a side hustle, or by finding places in your current spending where you can shift things around to free up money being spent elsewhere. If taking on a side hustle seems appealing, then stop reading and get busy doing it! But if you suspect that the “extra money” is already present but you are spending it elsewhere then it’s time to investigate your purchasing patterns.

 Step 1 in this investigation is to build out some spreadsheets and simply track where you’ve been spending your money. Ideally you can start by going back 3 or 4 months to build out the basic patterns by pulling your various transaction records. There are plenty of budget tracking tools out there to help you here but the key Fundamental categories of expenses are Fixed, Variable, and Discretionary. Fixed costs include mortgage/rent, car payment, insurance, and anything else that is the same each month and can’t easily be cancelled without radically impacting your life. Variable usually includes utilities, gasoline, groceries, and other necessities that change each month and that you are able to influence somewhat through choice and behavior. Discretionary is pretty much everything else where you have a much bigger role to play in your daily decision making. A quick note, many of your discretionary choices might show up as “fixed” in that they autopay for the same amount each month, but these are discretionary in that cancelling the payment is optional with minimal life impact. Contrary to public opinion, Netflix is indeed a discretionary cost.

 And as a reminder, this is just an observation phase, not an operational phase. If you find yourself really inspired to begin changing your spending habits now or at any point along the way, then great! Go for it! But the point here is just to bring your spending fully into awareness. No more, no less.

 Once spending patterns have been more fully brought to light, we can begin to move into Step 2 of building a monthly budget. But before going there I want to point out that almost all of my clients are somewhat amazed at how unaware they were around certain aspects of their spending. Common blind spots are monthly services no longer used and underestimating how much money they spent on entertainment like food and drink oriented socializing. For many clients this new found clarity around their spending easily illuminates the areas that they want to focus on changing.

 As stated earlier, the larger goal in creating a monthly budget is to provide a specific amount of “extra money” that we can put towards debt management. Now that we are past Step 1, it’s time to check in to see what other Significance goals have come up. Identifying them now will make it easier to flex our spending later to create that money. As I mentioned above, often this is fairly easy and revealed through blind spot exposure. “I had no idea that my random lunches out with coworkers added up to almost $1000 at the end of the month! Ugh, I don’t even like most of those people, I’m changing that right away!” Other times it can be trickier. “I had no idea that my random lunches out with coworkers added up to almost $1000 at the end of the month! Those lunches are fun and make collaborating with those folks at work much easier, I don’t want to have to give those up!” Though different, in each case a Significance goal was pretty clearly revealed.

 But again, the key is to bring intention to bear on what the awareness from Step 1 has provided. Looking through the bigger spending patterns can be revealing here. Putting the Fixed costs aside, both the Variable and Discretionary costs are fair game for analysis. Where do you see places to make changes that don’t immediately feel like a contraction? Where do you see opportunities to “own your choices” more fully and treat this as a game to be won? What are the Fundamentals and how can they be changed?

 From here fully move in to Step 2 and build out a budget based on goals for spending with upper limits in mind to help guide and shape our decision making throughout the next month. For example, if you decided to cut your lunch with coworkers’ costs down from $1000/mo to $500/month then you would obviously need to make different decisions than you had previously. Maybe you bring lunch with you, maybe you opt for Chipotle instead of Capital Grille, but the point is that you are planning behavior changes to align with desired outcome changes. Combining the math from the spreadsheet with clear planned behavior changes is the goal here. A rough hope to “do better next month” just isn’t going to cut it.

 Once you have this budget guide in place and have planned out the behavior changes needed to support it then it’s time to test it out in the real world through experimentation. In other words, you are testing out the alignment between the Fundamental and Significant. The goal here is to build sustainable change, the kind that feels good in the moment and yields results over time. These new behavior patterns may need to be tweaked from time to time, or revised as more latent Significance goals emerged and previous ones subsided. After 2 or 3 months of real world experimentation and observation your realistic monthly budget goals should be greatly clarified.

**FYI, this is a simplified and idealized walk through. In the real world this process is often muddy and confusing, especially when there are multiple Significant goals involved that are all competing to be met. Making this process even trickier is that there are often other Siginifcant goals in play but remain unacknowledged or unconscious. That’s why Debt Management is such a tough nut to crack for so many people!**

 In some sense, Step 3 is the easiest one to make. How much money have you “found” by living according to a budget that guides a lifestyle that you feel good about yet still leaves you with money in your pocket at the end of each month. More importantly, is it enough to move to Step 4 where you start to actively tackle your debt? There is no set number that “works” here, but somewhere near 10% of your total income is a common goal I see. But more important than actual dollars are your deeper feelings. The real question is does this dollar amount support our starting Significance goal of “succeeding at this and feeling really good about it.” You are unlikely to connect to that goal with $25/mo of “extra money,” but $500 is really going to make an impact.

 If you are happy with where you are after Step 3, then come back next week for a detailed walk through of Fundamental vs Significant in Step 4 where we break down the total debt profile and sketch out a path through it. If you don’t like where you are here, then circle back to Step 1 and start a 2nd run through. And I very intentionally didn’t say “start over.” Iteration is the name of the game, and there are always opportunities to improve the processes we are living by. You might just be surprised at how much easier this all is the 2nd time through it.