We all would like great health and physical fitness, but only people with self-discipline achieve such goals. Other areas of life are the same way. Invest time, commitment, and sacrifice in your marriage or dating relationship, and it grows stronger by the month. Replace that with neglect and making decisions just to please yourself, and the relationship weakens. The same is true of your career and a host of other of life's activities. Since Sound Mind Investing is an investment newsletter, I hasten to include your financial affairs on my list. They also need time, commitment, and sacrifice in order to be healthy and grow. Are you in shape financially?

Before you begin your stock and bond market investing, you need to achieve a certain level of financial fitness. It's like those exhortations to see your doctor for a physical exam before launching out on a new exercise program. Think of it as practicing financial aerobics. As you read more SMI content, you'll learn why I strongly recommend getting debt-free (Level 1and building a savings reserve (Level 2) as your first two priorities. Once this foundation is laid, you can then begin using your monthly surplus to venture out into the higher risk areas of mutual fund investing (Level 3 and the Getting Started portfolios). When your portfolio reaches $25,000, it's time to add more safety through further diversification (Level 4 and SMI's model portfolios).

Rely on God's wisdom and resources to see you through. SMI takes its name from 2 Timothy 1:7: "For God has not given us the spirit of fear, but of power, and of love, and of a sound mind."

Will this be the year your good intentions lead to determined action?

Regardless of the Level at Which You're Working, You're Still an "Investor"

Many readers seem to feel that the ranks of investors are limited to only those people who own a lot of stocks, bonds, real estate, and so on. That's far too narrow a definition. Scripture makes it clear that each of us is a steward of God's resources to some degree. That means we all have to make management decisions. At its most basic, investing is making management decisions to give up the use of something now in order to have more of something later. Thus, every spending decision is an investing decision.

For example, if you decide to use your Christmas bonus to pay down your car loan (as you might at Level 1) rather than take a weekend ski trip, that's an investing decision. Or, if you add some of your monthly surplus to your contingency fund (as you might at Level 2) rather than treat yourself to some new clothes, that's also an investing decision. The question isn't whether you have investing responsibilities—of course you do. Rather, the question is: How diligently are you carrying out the God-given responsibilities of stewardship you already have?

The Four Levels are the heart of the SMI philosophy. Their primary benefit is that they offer a framework for setting priorities on how to spend your monthly surplus. If you have consumer debt outstanding (Level 1) or lack a sufficient contingency fund (Level 2), I believe it's best to apply your surplus in those areas. However, that doesn't mean you are free from making important investment decisions in connection with stock, bond, and money market securities.