Budget with a Why: Meet your Money Map

Which direction will you go?

To create a budget that works, we started by looking at our money mirrors. Now we’re going to draw a money map. Which direction do you want to go? North, South, East, West, there’s so much to see! When it comes to money, you get to choose what’s important — that’s the direction you’ll go. And what you choose will shape your journey.

Karisa talked about what’s important about her clothing spending, so we asked her, “Are appearance, excitement, and creativity truly important to you?” Here’s what she said:

“The short answer is yes. I think these things are all good. But I’m actively choosing to prioritize something else that’s more important to me: paying off debt. To me, that represents being stable or just not owing anyone anything. Because I’ve made that decision, I have to actually think about things I can change in my budget. For me, that’s spending less on clothes to save money, and finding other outlets to be creative.”

For Karisa, debt freedom is what’s most important to her. So on her money map, she’s headed in that direction.

Okay, now your turn! Try this:

  1. Remember what your habits seemed to say was important to you. Is this truly important to you?
  2. What’s more important? What’s less important?
  3. What’s most important? That’s the direction you’re going to go on your money map.

Tell us your direction. Comment below!


See the entire Budget with a Why series to create a budget that works! Or, navigate below to check out other steps in the process.

Step 1: Look in the Mirror

Step 2: Reflect

Step 3: Meet Your Money Map

Step 4: Plan Your Route

Step 5: Start Your Journey

 

7 Comments

  1. Most of our spending is going toward our first house. It is really important to us that we pay it down as fast as we can while our financial situation is stable. We agreed that this would mean we’d have more flexibility in the future–whether it’s to go back to school, change jobs, or have kids.

    What could be less important is furnishing/decorating the house perfectly. It’s always a work in progress, but that means that we’re always buying knickknacks to fill the house. I think we could use an editing eye (and a budget limit) when making purchases so that we don’t end up with clutter.

  2. Hi Becky, have a look at the possibility of paying your mortgage twice monthly ie. If your monthly amount is say $1000 then if your lender permits, pay 500 1st of the month and 500 @ the end of the month. The result is dramatic, you end up reducing the term by about 50% and the interest about the same. Check it out.

    • Hi Fred – Hm – that’s interesting… I haven’t heard of such big results just from paying twice a month. In fact, I found an article that says making a half payment twice a month could even result in paying more. Here’s a link to the post: http://www.bankrate.com/finance/mortgages/split-monthly-mortgage-payment-a-bad-plan.aspx

      To make a faster dent in your mortgage, or any loan, the author suggests making additional principal payments. One way to do this is to make a larger payment each month and choose “apply to principal”, or to make an extra payment each year.

  3. I would like to follow this discussion.

    • Hi John – Be sure to check the ‘Notify me of follow-up comments’ box at the bottom of the post so you can keep up to date on this thread.

  4. How will making two half payments monthly help that much?

    • Hi beckie – That’s a good question! I haven’t heard of results that extreme. However, I have read that paying half of your mortgage payment on an every two weeks basis can help to save interest and shorten your term. That’s because paying half every two weeks will actually mean you’ll pay a total of 13 monthly payments, rather than 12, over the course of a year. This method is more of a mind trick that helps break up an extra monthly payment over the course of a year, which allows you to accumulate less in interest and pay it off faster. Hope that makes sense! Read more here: http://www.bankrate.com/finance/mortgages/split-monthly-mortgage-payment-a-bad-plan.aspx

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