Sep 20, 2011

Balancing Financial Priorities

I feel like I'm always working to keep my financial priorities balanced. There are three areas I focus on, and they all want a bigger piece of the pie:

  • Savings, which includes Retirement, Education, and Emergency Fund

  • Debt, our only one being the Mortgage

  • The Present, meaning daily expenses as well as wants like a vacation, gourmet food, and so on

An increase in spending in any of these areas means a decrease in one or both of the others, so I am constantly trying to find the right balance for us. A few years ago, debt was the biggest priority, until we paid off everything but the mortgage.

Now, our biggest priority is building up savings so that we can pay for private school in a few years (and maybe pay off the mortgage too). But every once in a while, I get a hankering to really push that mortgage balance down and I have to remind myself why we've made savings a bigger priority than the mortgage.

I also have to regularly remind myself why it's important to limit spending in The Present. Maintaining a certain quality of life is important to both my husband and me, and we don't follow the strictest of budgets. But we are both pretty well-disciplined and not prone to impulse purchases, especially big ones. Nevertheless, sometimes I'll find that I have to talk myself out of stopping at a drive-thru for a soda when it's 100+ degrees outside and a cold fizzy drink would really hit the spot. But I do talk myself out of it most of the time, because I'd rather be able to pay for private school and those $2 spends add up over time.

Occasionally, I long for a time when I won't have to think twice about spending $2 for a soda. But most of the time, I'm just grateful that I have the option at all.


Gina said...

Just today, I came to the realization that what's been keeping us from paying our debt down to ZERO is that my priorities and my husband's priorities go in the opposite order. I'm with you: savings, debt, everyday--whereas he sees it the other way around! I am having trouble getting him on board with a plan where we sacrifice the daily life temporarily to get the debt paid. Then we have FREEDOM to do it differently, if we choose.

Ben - BankAim said...

I dream of the day I have my mortgage paid off. you are right that an emergency fund and savings is more important, but to have my mortgage paid off is a dream!

Chief Family Officer said...

I love those AHA! moments. Although, it sounds like you have kind of a big task ahead of you trying to convince your husband to get on the same page. Would the allowance method help, if you don't use it already? Then he can still have his "fun" money but at least it's controlled. That would never work with my husband, but he's pretty good about not spending so I don't have the same issues. At least you know what you have to do - I wish you much luck in the doing!

Sarah said...

It's so tough sometimes to forgo those little impulse buys. Often they are even things we think we need or can afford. But like you said, they add up over time. And it's good to have a goal in your head already, like saving enough for private school tuition, to use when you are talking yourself out of those purchases. Since that may be a few years away, you could break it down a little bit and say that you want to have X amount of dollars saved by the end of the year towards the tuition. Then saving $2 by not buying that soda may seem a little more pressing.