One Budgeting Hack to Rule Them All

Kurt Theobald
6 min readApr 3, 2020

If debt feels like a heavy burden in your life and you can’t seem to get ahead financially, this article is for you.

What if I told you you could have thousands of dollars sitting in your bank account in one year? For many, that seems impossible. Between relentless debt payments, surprise expenses, and the inevitable impulse buy now and then, the money seems to find a way out of your bank account. I know, because I’ve been there.

Here’s how I used to think personal finance should work: You shouldn’t spend your money on things you want so you can use it to chip away at your DEBT MOUNTAIN instead! (how exciting, right?!) And you know what I discovered about that approach? It doesn’t work. And it makes you feel really bad along the way.

And there are really good, mathematical reasons to take this approach: The earlier you pay off your debt, the less income expense you incur later. So if you have the cash, why not pay off the debt, right? I’ll tell you why: Because you never learn to grow your money.

Here’s the ugly truth of the matter: If you somehow resist going to eat out or buying the latest game or sweater or gadget or movie tickets (which is really hard to do), you manage to pay down your debt a bit, and that money still flows out of your bank account. By paying off some of the debt, you haven’t increased how much money you have. So on this plan, when do you actually have extra money in the bank account? In like a hundred years after you’ve paid off all of your debt… that’s a lame deal. And that’s IF you don’t have unexpected expenses come up and TORPEDO ALL OF YOUR PROGRESS! Which they inevitably do! So when you have that precious moment of actually feeling encouraged about your debt progress, you get pushed back into the hole from whence you came.

So I say forget that method! Stop playing the mathematical game and start playing smart. The difference between the Haves and the Have-nots isn’t debt. They both have debt. The difference is that the Haves don’t run to pay off their debt as quickly as they can like the Have-Nots do. I know I’m stating the obvious here, but it’s surprisingly profound: The Haves have money. That’s why they’re called Haves. They hold their money and use it to grow their wealth. They could pay off their debt, but they only do that if they can’t get a higher return than their interest expenses investing it elsewhere. The Haves know how to invest. Have-Nots don’t. How did the Haves learn? They practiced. How did they practice? By holding their money and taking risks with it, trying things, losing some or all of it, and then rebuilding their cash reserves and trying new things. And over time, they got better at it, and eventually, their savings started working for them instead of slipping away. (They also found and learned from mentors and teachers who have taught them and guided them along the way, so wise and experienced counsel is important!)

Are you afraid of taking those risks and losing your money on bad investments? Are you afraid of being rejected or looking dumb to a potential investing mentor? Let me make it easier for you.

If you take your extra cash and pour it into your debt, you lost your money for sure. If you invest it, you might get it back, and it might bring some of its friends with it when it does. If it doesn’t, you’re not much worse off than if you had paid down your debt. It sounds backwards, only because we’ve been trained to think about money all wrong. We’ve been trained to value our debt level more highly than our investing ability. If you focus on the former, you’ll likely be in bad debt for the rest of your life. If you focus on growing your investing ability, your debt will become something you can pay off if and when you choose to, and you’ll have the ability to create a lot more value in your life, which is a great feeling.

So how do you do it? It happens in Three Steps.

Step 1: Bankroll

Bank your cash. Keep resisting the impulse spending and unnecessary expenses. Make minimum payments on your debt. Stop chipping away at your debt with extra payments! Watch the dollars grow in your account and don’t touch them. As your account balance grows, every dollar that is added testifies of your ability to be wealthy. Remember that.

Then, at the end of your first month, reward yourself by spending a small fraction of the cash you’ve saved in your account. Celebrate. Then keep at it. Set a new, higher “floor” each week or month or paycheck that you won’t let your cash drop below.

I hear what you’re thinking: What good will it do if I just let it sit in my account and don’t spend it? Trust me. Eventually you will. But when you do, it will be from a place of strength instead of weakness, from intention instead of reaction. It’s not how much money you have that makes the difference between wealthy and poor: It’s how you think and act.

Step 2: Invest

When you have extra money, you can get into an investment mentality versus a “get out of debt” mentality. I call it “living in equity”. It’s shocking how different life is when you operate from this position instead of “living in debt”. You are no longer constantly looking over the edge into the ravine of your imminent financial doom. You have space. Space to think, be creative, be strategic, plan, buy in bulk, get ahead. It feels like winning instead of just getting by.

Here are three fundamental keys to investing successfully.

Investment Key #1: Always invest significantly less than you have stored. This will ensure you stay in that equity-plus energy and mentality and don’t get dragged back down into “barely enough” space. And the cool thing is that if an emergency need comes up, you pull it from your equity reserve instead of falling back on more debt. It’s an awesome feeling!

Investment Key #2: Instead of thinking about things in terms of “debt” and “investments,” think of everything as an investment. Paying off debt is an investment in that your ROI is the saved interest. But perhaps you can invest in something else that gives a better return on investment, so you choose that direction over paying off your debt.

Investment Key #3: Steward all of your resources. It’s also easy to think about your resources in silos, for financial investments to produce financial return on those investments. This is a cardinal error that many people make.

If you haven’t read my article The Five Resources that Matter More than Money, I strongly recommend it. Your goal is to live in surplus in each of your resource categories, and you can use the various resource categories to invest in things that will produce returns of all kinds: Financial, emotional, mental, physical, time, and focus. So sometimes, making a financial investment to increase your focus or physical energy can be a great ROI. Money flows positively when the “deeper resources” are managed well. It’s when we don’t have enough energy emotionally, mentally, physically that money starts slipping through our fingers.

When you manage your finances with a view to the full spectrum of resources in your life, you will do much better than if you financial investment with financial return on investment. It’s amazing how much more effective you are at earning and growing financially when you have emotional, mental, physical, time, and focus surplus!

Step 3: Recycle (i.e. there’s only two phases)

Whereas the “debt paradigm” is a vicious cycle, consistently dragging you down deeper, the “equity paradigm” is a virtuous cycle, consistently lifting you up higher. But it is a cycle that requires continual stewardship and doing the same simple things over and over. A time of short-term neglect can wreak serious havoc on your finances, so the key to long-term success is diligence and consistency.

The Fear and Opportunity of DSD

It’s scary to DSD (do something different). It feels safer to just do what everyone else does. But look around. Look at the debt addiction. Debt is a tool. Don’t worship it and don’t let it control you. Being debt free is not the ultimate expression of financial mastery. Consistent investment and return is. So DSD. Change focus. Become a great investor. Don’t sweat debt. Debt loses all its power if you learn to invest.

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Kurt Theobald

Visionary. Truth Seeker. Disruptive Entrepreneur. Relentless Innovator. Team Builder. Happily Married Father of Five.