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Here's an easy simple plan that works for everyone -- not only will it make you rich quickly, it'll make you happy too!

Seriously though, when it comes to Resource Management, below is what I've come to. See how it gels with you.

Let's pretend that I have a list of everything on earth that I might want to spend my money on, broken down, itemized, and prioritized. Vastly oversimplifying and leaving out lots of details, let's say it looks like this:

1. nourish my body
2. pay mortgage payment
3. pay $2k into my RothIRA
4. treat myself to a great meal once a month
5. pay $x extra down on my mortgage
6. save $y for a trip to Alaska (our 100th anniversary is coming up)
7. save $z for that new car I'll need next year
8. pay another $1k into my RothIRA
9. save another $1k to make Alaska extra special
10. save another $w to upgrade that car to the one I _really_ want
11. max out my RothIRA
12. put an extra $100k toward the mortgage
13. ... etc.
    

Note that "mortgage" shows up a few times. At one priority level is the bare minimum, at another priority is the amount extra that I would need to pay in order to meet my personal goal of paying the house off on a 12 year schedule, and at a third priority is the amount I'd just love to be paying if I ever could.

Now, assuming I did that right, I can take the money I get each month and just start at the top and go down the list until I run out of money. With this list, money management is now trivial! Clearly there are only two problems with this list:

• When I break a tooth and need a crown and get to decide between the solid gold or cheaper porcelain, which do I choose?
• There's no way such a list could actually be created. :(
  

The good news is this: I have a halfway decent idea about how far down the list I'm going to get this month. Most of the list before that point I can lump into "likely to happen" and most of the list after that point I can lump into "not likely to happen." The really interesting part is the little window right around where I expect to end up. Basic Groceries -- gonna happen. I don't have to worry about exactly where it relates in relation to "pay the water bill." Extravagant Groceries -- not likely to happen. I don't have to worry about exactly where it relates to "pay extra $100k on the house." Did I say "Groceries" twice? Therein lies the cool part. Let me explain.

Using the list above, let's pretend that I expect I'll be able to get all the way down to having #8 taken care of, but only a small portion of #9. Now, all my financial decisions are trivial: at the grocery store making a purchasing decision, all I have to think about is how this decision will move that line. Wheaties or generic? -- extra-special-Alaska. That's the real question: what do I want more: Wheaties, or extra-special-Alaska. In fact, all my financial decisions are about one thing: extra-special-Alaska. If I do well enough early in the year, then I can make the rest of my financial decisions based on #10: upgraded car. If I do poorly, then I have to start eating into #8 instead.

There are five key points:

1. The details of what's in "likely to happen" are actually important, just not on a daily scale. We need to be aware of where our money is going, and looking in there for places we can be more efficient and/or make adjustments. We need to pay attention. Also, we need to make sure that we put in this category the things necessary to meet our goals, and we need goals.
2. The details in "not likely to happen" are also important. We need to be aware of our dreams and not forget them. When it's goal setting time, we need to look at these dreams and decide to take steps towards them.
3. In this simplified case the window is trivial, but in real life we need to make tough prioritization decisions (more in a 529 or more in a 401k? one more dollar towards my 2 month behind mortgage or one more dollar towards my CC debt?). And sometimes there may be a fair number of things inside the window -- this is reality we live in, no scheme will get us away from the hard parts.
4. They say "the greatest cause of unhappiness is giving up what we want most for what we want now." I'm not certain that this is the absolute "greatest," but I've become convinced that it ranks up there for sure. Wheaties or generic or extra-special-Alaska? Alaska is years off, Wheaties are right here. This is the core issue that we all face every day. Some days we do better than others; some days are rough. We're people, it's life.
5. This actually works for most any resource management case I've come across: money, time, people, garden space, etc.
   

Point #4 is the biggest one, the hardest one, and the one we all have to deal with forever. It can also be a very rewarding one: giving up what I want now for what I want most gets me what I want most, and it also gives me a huge self-boost at the same time.

That said, remember the two complaints I had about the original list (above)? Note that both of these complaints are now non-issues: I never actually had to make the list (except for the portion in the little window), and when something unexpected comes up, I can still make my decisions based on their impact on the motion of that line. It's all about extra-special-Alaska baby!