Say you’re in Kansas and you want to see the Pacific Ocean. You pack your bags, gas up the car, and grab your morning cup of coffee at the drive-thru. Moments later you’re on the interstate, breezing along with the day’s first rays of sunshine in your eyes.

Sunshine in your eyes? Wait a minute—that’s not right! A quick glance at the map confirms your suspicions. You re heading east, toward the sunrise. To get to the Pacific you will need to turn around. And the sooner you do it, the better.

That’s how it is with our finances. We may have a goal on the horizon, but if we’re not headed in the right direction, we’ll never get there. And if we don’t change our course, we’re apt to wind up someplace where we never wanted to go.

Changing your financial direction is a four-step process: You need to spend less than you earn, avoid debt, build liquidity, and set long-term goals. To omit even one of these steps is to miss the mark—you might make it to Las Vegas, so to speak, but you’ll never get through California to see the ocean.

Spend less than you earn

Most of the people who rely on our firm for financial and investment counsel genuinely want to handle their resources wisely. Many of them, however, make the very same mistake most Americans make—and it’s the biggest obstacle there is to financial freedom. It’s a consumptive lifestyle. By consumptive, I mean a lifestyle in which we spend more than we can afford to—or more than we should, given our goals and priorities. It’s not what you choose to spend your money on, it’s how much you spend.

Why is overspending such a significant problem? Simply put, it’s because we have limited resources to use on unlimited alternatives, and living within our income means that tough choices must be made. We think in terms of what we could do or buy with 100 percent of our income—but after taxes, giving, debt repayment, and savings are taken out, we really have only about 45 to 60 percent left to use.

In order to spend less than we earn (or, as my son Tim puts it, “spend less than your dad earns”), we need to start thinking in terms of how we can use the 45 to 60 percent available to us. These decisions are part of your personal budgeting process. Once we begin living within our means, we create a positive cash flow. A positive cash flow is a critical prerequisite to building liquidity—step three in the direction-changing process—and ultimately achieving our long-term goals.

Of course, as with any worthy endeavor, the decision to spend less than we earn demands commitment, discipline, and time. To get from the Kansas wheat fields to the California coastline, you must pass exit signs pointing toward any number of interesting sights and attractions. Your commitment to seeing the Pacific Ocean is what will keep you from venturing off the highway. At other times, on those long stretches of road when the scenery never changes, you may get tired. You’ve been driving for what seems like forever; wouldn’t it be easier to just turn around and go home? At those moments, discipline will carry you forward.

Spending less than you earn is just like the westward road trip. Like roadside attractions, material desires will arise to distract your focus. Like the seemingly featureless highway, the attempt to live within your means can leave you weary or bored. But if you recognize that your goal will take some time to achieve, you’ll be better equipped—emotionally and mentally—to stay the course.

Avoid the use of debt

Borrowing money is not the problem. Failure to repay it is. Nowhere does the Bible prohibit borrowing—but as Psalm 37:21 says, “The wicked borrow and do not repay.”

Borrowing money is always easier than paying it back. Interest payments and income taxes conspire to make repayment a difficult process. Suppose, for example, you use a credit card to take your family on vacation, or to get some living room furniture, or to buy some fancy electronic equipment. Let’s say the tab comes to $2,000—a debt you figure you can afford because you can afford the payments. Other than making monthly payments, you have no real plan for retiring the debt.

At 19.8 percent interest, by making the minimum monthly payments on your card (and assuming you do not charge anything else), it will take you 32 years to repay the $2,000 debt. Thanks to the interest charges you’ll incur during that time you’ll actually wind up spending a total of $10,000. And thanks to the income tax bite, you’ll need to earn about $15,000 just to have the $10,000 you need. That’s $15,000 of your hard-earned money that can’t be used for anything else because you have to make the monthly payments! And by the time you finally get out from under the debt, your $2,000 worth of vacation memories will have faded, your living room couch will be popping its springs, and your once-fancy electronics will be relics that you no longer have any practical use for.

There’s no question that debt repayment can be a long and difficult process. My book, Taming the Money Monster, offers a detailed analysis of the steps you can take to get out of debt. In a nutshell, you need to 1) stop going into debt, 2) figure out why you went into debt in the first place and solve that problem, 3) set up a workable repayment plan, and 4) hold yourself accountable to someone. Organizations such as Larry Burkett’s Christian Financial Concepts, the Consumer Credit Counseling Service, and others can work with you and your creditors to create a repayment plan and ensure that you stick with it.

Build liquidity

The Boy Scouts have a motto we need to adopt: Be Prepared. When the unexpected occurs, it pays to be ready. When you spend less than you earn and build a margin of savings into your budget, you’ll have the financial fortitude to meet whatever comes your way. A medical emergency, an expensive car repair, or even the loss of a job will not threaten your financial security.

Likewise, when you build liquidity you have the freedom and flexibility to take advantage of life’s opportunities. Setting up a 401(k) retirement account, investing in the stock market, or even buying a new house or a car all become possibilities when you have a cash reserve—and when you have the money in hand, you’ll be equipped to make wiser, less pressured, financial decisions.

Let’s review. When you spend less than you earn, you create a positive cash flow. When you avoid debt, you free up your future income so you can use it on something other than repayment. Together, these two steps generate liquidity: the tangible resources you need to secure your financial position and take advantage of the opportunities that come your way. Now what?

Set long-term goals

Goals are the things that provide direction in your life—just as a desire to see the Pacific Ocean dictates that you have to head west. Goals are the philosophical underpinnings of your actions; they are why you do what you do.

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As you set goals, remember that the longer-term your perspective is, the better your current decisions will be. Living in Atlanta, we were privileged to be part of the city that hosted the 1996 Summer Olympics. I marveled at the planning that went into the event. A giant time clock hung over the interstate, counting down the days until the world would arrive on our doorstep. As time passed, the Atlanta Committee for the Olympic Games handled everything—inviting athletes, selling tickets, drafting new transit routes, and even planting shade trees and designing water fountains to provide relief from the city’s sweltering summer temperatures.

It was an amazing feat, eclipsed only by the accomplishments of the athletes themselves. In the months prior to the start of the games, we watched athletes from all over the world running or cycling through Atlanta’s streets, tackling the hills over and over again. As I saw their speed and stamina, I could only imagine the conditioning and competition that had brought them to the Olympics. Think about spending four to eight years training for a race that would take just fifty seconds to complete!

Yet if you want to win a gold medal, that’s how it is. You can’t set your goal a week before the competition begins; you’d be doomed to failure if you did. Likewise, if you want to send your kids to college, you need to start working toward that goal years in advance. If you take a short-term perspective, waiting until your college-bound child is a junior in high school, you may never be able to afford the tuition payments. Extend your time horizon, though, and a whole lot more becomes realistically possible.

So what are your long-term goals? In addition to funding your children’s education, you might want to set yourself up for a comfortable retirement or provide for the special needs of one of your relatives. Maybe you want to pay off your mortgage, or purchase a larger home. Perhaps you want to increase your giving.

Regardless of what they are, your goals must be measurable. Sit down and make a list of your goals. Quantify each one in terms you can measure, and set a date by which it should be accomplished. Then, make a habit of reviewing your goals on a regular basis. They are not destinations in and of themselves; instead, they are the signposts, the markers, on your way to financial freedom. They are your cross-country map.

To solve your financial problems—to eliminate anxiety, to get out of debt, to be able to give more—you need to go through each of the four steps: Spend less than you earn, avoid debt, build liquidity, and set goals. My book, Master Your Money, offers strategies, worksheets, and more information to take you through the process, if you need help. For example, if you don’t have a budget (or if you have one and it isn’t working), Master Your Money can show you how to figure out how much you need to live on, and how to allocate your resources to create a positive cash flow.

Adapted from Generous Living by Ronald W. Blue. Copyright © 1997 by Ronald W. Blue. Used by permission of Zondervan.