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How to Fix Your Complex Financial Puzzle

financial puzzleIt’s a little embarrassing to admit, but my 29 year old girlfriend and I love to sit down and puzzle. Yes, I know, puzzles are for 80 year old retirees that have nothing to do, but there’s just something about fixing what was once broken that appeals to us. So, every other month or so, Liz and I  stop by a thrift store and find a wicked awesome 50 cent puzzle that we’ll both enjoy and put it together over the course of the next few weeks. I mean seriously, take a look at the puzzle we’re working on right now. You can’t tell me this isn’t an awesome form of entertainment!

As Liz and I were piecing this puzzle together yesterday, I couldn’t help but make the analogy to the average American financial puzzle.

The Broken Financial Puzzle in America Today

In the United States today, the average financial puzzle has an extremely high difficulty level with 10,000 pieces and a blindfold. It is nearly impossible to put this puzzle together. But the thing is, when the financial puzzle was first given to us, it had nowhere near this level of difficulty!

Americans, as they grow up from a teenager to a young adult to a 30+ year old, have willingly taken a super simple 24 piece financial puzzle out of the box and started making dumb financial move after dumb financial move, and have willingly cut up each of the pieces several times to form their own complex puzzle!

Isn’t this the truth? How much debt does the typical person have when they are 15 years old. More than likely they have none. If you asked them to explain their finances to you, they could simply show you their savings account and their number one asset, their bicycle. Over the years though, the average citizen takes on student loan debt, credit card debt, car loans, and mortgage loans. Each person has willingly added to the complexity of their financial puzzle as they have grown older.

And, as if that weren’t complex enough, many have decided to learn absolutely nothing about personal finance along the way, essentially blindfolding themselves as they try to put all of the pieces back together. Here is a look at the major pieces of their financial puzzle:

financial mess financial puzzle


You don’t have to dig too deeply before realizing that the average person has a huge financial mess on their hands. Out of their total income, more than 60% is used to make debt payments. And, if at any point in time they do not make these payments, their transportation and shelter could be taken away from them! This is an amazingly high-stress environment to live in!

The Ideal Financial Puzzle

To be completely honest, I didn’t understand the ideal financial puzzle until just a few years ago. When I was in my early 20’s I was a Finance undergrad and believed that debt was a tool to attain assets and to become wealthy. My first goal out of college was to earn $500 in additional income so I could lease a brand new Mercedes (yes, I was dumb once too!). Fortunately for me, I did not choose to put on the blindfold and go about my life like everyone else. Instead, I reached for a few personal finance books and spoke to those that were wealthy. Rather than buying that Mercedes and adding to the complexity of my financial puzzle, I decided to buy a $2,500 car that got me from point A to point B.

Since then I have paid off my student loans, my credit cards, and have even paid off my home mortgage! I am completely debt free and have created the most simple financial puzzle that I have ever seen.

financial mess financial puzzle solved

Instead of spending 60% of my income on debt payments, those categories have been replaced with the category of “Savings”. This money could be used to invest more heavily in my 401(k), into real estate, or into a new business venture that could generate even more cash each month.

My goal in this article is not to show you how great I am. That’s exactly the opposite of what I want to do. Instead, I want to show you what’s possible. There are so many financial gurus that tell you debt should be used to increase your wealth – that you shouldn’t pay off your house because you can make more in the stock market – but guess what? Do you realize how rich you could become if you just flat out got rid of your financial mess? How many extra dollars would you have each month if you had absolutely no debt payments? Are you shocked at the number you just came up with? I hope so. And I also hope that you have the desire to ditch your debt and become wealthy. It is absolutely possible, and I’m going to show you how.

How to Fix Your Financial Mess

When I decided to transform my financial puzzle back into a kid’s version, I couldn’t believe how simple the steps actually were to get there. The next few paragraphs are not going to make you go, “Whoa, those action steps are genius! I never would have thought of that myself!” Instead, you’re going to think the steps are way to basic. But let me tell you, I took the steps and I can tell you that they absolutely work.

When I decided to rid myself of all my debts, I utilized the super simple 7 step plan that was provided my Mr. Dave Ramsey. Learn these steps and put them into action to simplify your financial puzzle and grow wealthy.

1) Set up a $1,000 emergency fund

Emergencies happen and unless you set up a small fund before paying down your debts, then you will be forced to go deeper into debt to cover them. This does not bode well for your mental game and drives many people to simply give up. Build up the fund first and take care of emergencies with cash as they happen.

Save up your emergency fund by:

    • Having a garage sale
    • Selling items on Craigslist
    • Selling your car and buying a cheaper one
    • Doing odd jobs for people

2) Pay off all consumer debt

This is by far the most difficult step and can often take the longest. Here, you need to pay off your student loans, credit cards, auto loans, and any other consumer-type debt that you might have. Make the minimum payment for all debts except the smallest one and do your best to pay that off as quickly as you can. Once paid off, put that payment (that you no longer have) and put it toward the next smallest debt. Pay that one off and move on to the next one. Keep going with this process until you have paid off all of your consumer debts.

Pay off your consumer debts by:

    • Reducing your expenses
      • Shop at discount grocery stores and stop going out to eat
      • Call your phone provider and get your plan reduced or switch to a low-cost provider
      • Shop around for cheaper insurance. Raise your deductible to reduce your monthly premiums
      • Cut your cable. You’ll be working too hard to watch TV anyway
    • Increasing your income
      • If you deserve a raise at work, ask for it
      • Take on a second job
      • Start your own side-business

3) Save up a real emergency fund: 3-6 month’s worth of expenses

Now that you have all your consumer debts paid off, just continue doing what you had been doing and instead of putting your money toward debt, put it into your savings account to build up a big emergency fund: 3-6 month’s worth of expenses.

4) Invest 15% of your income

You have officially done away with your car loans, your student loan payments, and your credit card bills. You now have some extra money at the end of each month. Put a portion of that savings toward your future retirement – at least 15% of your income.

5) Put money into a college fund

Now that you have taken care of your own future, start worrying about the future of someone else – your kids. Start a college fund and contribute to it consistently. They will certainly thank you for your efforts when they realize their college costs will be taken care of.

6) Pay off your mortgage

This was by far the scariest step for me because nobody does this. People are strange for paying their mortgage off in 15 years let alone three. But, according to Dave’s plan, I paid off the remaining $54,500 in 2014. It was one of the greatest accomplishments of my life and I’ll never regret it. Today, my discretionary income is so large that I have the ability to invest big, to live big, and to give big. I wish the same for you. Pay off your house – you won’t regret that you did.

7) Build wealth and give

I already gave this one away a bit, but when you have absolutely no debts and very few expenses, living life is easy. The new challenge becomes understanding how to actually build wealth (instead of just paying off debts), but I am definitely up for the challenge. I trust that you are as well.

Follow these steps and fix your financial mess. It is 100% doable and 100% worth it.

Are you working on fixing your financial mess? What step are you on?



My name is Derek, and I have my Bachelors Degree in Finance from Grand Valley State University. After graduation, I was not able to find a job that fully utilized my degree, but I still had a passion for Finance! So, I decided to focus my passion in the stock market. I studied Cash Flows, Balance Sheets, and Income Statements, put some money into the market and saw a good return on my investment. As satisfying as this was, I still felt that something was missing. I have a passion for Finance, but I also have a passion for people. If you have a willingness to learn, I will continue to teach.


  1. Awesome post! My wife and I don’t have debt, other than our mortgage, so we are working at saving for the future and paying that down at the moment. It will be nice to have the mortgage balance reach zero. I just picture life without that large expense.

    Oh, and we love doing puzzles too!

    • That’s awesome, Jon! I love that you are paying down your mortgage and that it’s the final piece of your puzzle. My bank account is rising like crazy now – you’re going to love it. Oh, and keep on puzzlin! 😉

  2. I think that your pie might be a little too simplistic… Property taxes? Utilities? But I definitely see the difference and how much different your pie looks than the standard chart.

    We’re paying off our mortgage now, we’re a couple years away and I can’t wait!

    • Sure, you can add those, but they would be in both pies. I could have added a ton of specifics, but that’s not the point. The point is to simplify simplify simplify! It can only improve the quality of your life.

      Congrats on tackling your house debt! You definitely won’t be sorry you got rid of it. But, do me a favor and have a plan with what you are going to do with your money once you’re debt free. If you don’t, you might just find yourself going back into debt again.

  3. The mortgage is the hardest piece of large debt for us to erase, it just seems so insurmountable (probably due to the fact that Australian house prices are so large!).

    I am however investing more that 15% of my salary into investments (superannuation [like your 401K] and a large share portfolio).

    • It’s the hardest piece of debt for ANYONE to erase, but it IS possible! Sounds like you’re doing all the right stuff Mr Ikonz. Keep up the awesome work!

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