Prevent Money Problems So You Never Have to Solve Them

By Matthew Broom

Let’s face it – you can’t solve every problem. But you can prevent a whole host of money problems if you jump on them early. In the words of firefighter Benjamin Franklin, “An ounce of prevention is worth a pound of cure.” That statement is as true today as it was in 1734. 

In our professional lives, we are the public’s pound of cure. We are the problem solvers. In your personal life, it’s essential to focus on that ounce of prevention — particularly when it comes to your money. You must be a proficient problem solver on the job, but to be the best you can be off the job you must be an effective problem preventer.

Who knows?  If you handle your money well, you may not have to solve any financial problems. As blogger Shane Parrish says: “Problem preventers seem relaxed. They often go home on time. They take lots of time to think. We don’t know how well they would deal with conflict because they never seem to experience any. The invisibility of the work they do to prevent problems in the first place makes it seem like their job isn’t challenging.”

Relaxed, thoughtful, and conflict-free. Sounds like a great way to manage your money!

Let’s look at some of the significant problems you may face in your financial life and discuss ways to prevent them.

Problem #1: Debt

Debt is a problem for many of us, and it is undoubtedly a problem for many firefighters. Easy credit makes instant gratification easier than ever. The way we use debt reminds me a lot of that Oprah meme…you get a car, you get a car, you get a car!! And a whole bunch of debt.

Debt is a hole that’s easy to fall into and hard to get out of, especially as you dig yourself deeper and deeper. How do you prevent the debt problem? Avoid  it – especially high-interest debt. Don’t use credit cards, and if you do, pay them off monthly. Pay cash for a vehicle. If that’s not possible, purchase an affordable used car, pay it off, and drive it until you can pay cash for your next vehicle. Don’t buy more house than you can afford. Keep your housing costs — PITI (payments, insurance, taxes and interest) and upkeep costs to less than 30 percent of your monthly income. Plan to pay it off instead of regularly trading up.

The only form of debt that I personally approve of and also utilize is a home mortgage – and I can’t wait to pay it off. I tend to agree with Nassim Taleb, author of “The Black Swan” and “Skin in the Game” when he says, “I follow the Romans’ attitude that debtors are not free people.” I will not be free until my home is paid for and I don’t owe a dime to anyone.

And as billionaire investor Charlie Munger says, “It’s really tough to get ahead when you’re paying 18 percent.” So, avoid debt and prevent it from ever becoming a problem.

Problem #2: Retirement Savings (or lack thereof)

Does your department still have a defined benefit pension plan? If so, congratulations. Your pension should be a significant benefit in retirement. But will your pension be enough? Do you have additional savings? For those of us who don’t have a pension, are we saving enough? You can’t do this job forever, and time is unrelenting.

How do you avoid the problem of having to delay retirement and continue working? Come on, Sherlock, you know the answer.

Save! Now. The earlier, the better. The best time to plant a tree was 20 years ago or…right now! Don’t delay. Start saving into tax-advantaged retirement accounts and utilize low-cost index funds. Then stick with it. Remember that Ben Franklin was a fireman, too, and he figured it out. He said, “A penny saved is a penny earned.”

Don’t say you can’t afford to save. You can’t afford not to save. Don’t find yourself mid-career and muttering the classic firefighter line, “I wish I’d started sooner.” Start now and prevent ever having a retirement savings problem.

Problem #3: Not enough money/low wages

Living within your means is the key to preventing money problems. It doesn’t matter how much money you make. You can always overspend. Just ask lottery winners and professional athletes.

Frugality is an oft-forgotten virtue. Being frugal doesn’t mean you’re a cheap, stingy, miserly asshole. A cheap person focuses only on price. A frugal person understands that the price is what you pay while the value is what you get. Frugality, in essence, is being grateful for what you have, thoughtful about how you’ll use it, and prudent in your execution.

Everyone wants to live a comfortable lifestyle. I do. You do. We all do. But it’s important to avoid lifestyle creep as your income rises. Live comfortably, be grateful, and don’t allow envy (i.e., keeping up with the Joneses) to drive your lifestyle choices. The accumulation of “stuff” is detrimental to long-term financial success so keep it simple and frugal.

You can counteract the often low wages you earn as a firefighter and practice frugality while living a comfortable lifestyle. You have to budget your income, eliminate unnecessary expenses, optimize necessary expenses, and then focus on earning more. 

More money always seems like the obvious answer. But, if managed poorly, more money will still be stressful. Never mind that you’ll probably be away from home more too. Focus on the foundation before building the rest of the house. If you develop a solid financial foundation and practice frugality and discipline, you’ll avoid cash flow problems altogether.

99 Problems but Money Ain’t One

Don’t allow poor decisions to compound into large problems. You probably already know what you need to do to better manage your money. Ask yourself, “What stupid thing am I doing with my money that I should stop?” If you answer that, you’ll have step one laid out for you.

Whether you like it or not, you must be educated in financial matters, because money management is a required skill for successful living in the modern era. My money education started in a public library. A library’s got everything you need, but so does the internet. Get educated, be proactive, and prevent money problems. In the words of Jay Z, you’ll still have 99 problems, but money won’t be one.