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.
- Remember what your habits seemed to say was important to you. Is this truly important to you?
- What’s more important? What’s less important?
- What’s most important? That’s the direction you’re going to go on your money map.
Tell us your direction. Comment below!
23 thoughts on “Meet your Money Map”
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.
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.
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.
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
I just paid off a 0% interest balance transfer account. It was originally $8,000. and I was lucky enough to only pay a 1% fee for that loan, which was very unusual. I have been trying hard to pay as little interest as possible. The only loan left is our car loan, which is 2.49% interest. Working on paying that off. As we are on social security, that will take awhile. So, just as important is to work on a safety net. All in all I’m very happy with the GoodBudget program. It’s not all balanced yet, but what’s most important is that I know where our money is going and I can therefore figure out how we can make the best use of it. Karissa, you have been a big help in figuring out how it works and I appreciate your help a lot! I will very likely have some more questions! 🙂
Hi Erica – Congrats on paying off $8,000 in debt! That’s such an incredible accomplishment, and thanks for posting so we can celebrate with you 😀
Keep up the great work with the car loan! And, of course, let us know when your questions come up. We are so happy to help you reach your goals in whatever way we can!
I am like Kristen; my priorities have shifted. Taking care of my home and my family by shopping was my priority and it made me feel happy. However, I had a job loss and it took me 3 months to find another one. We survived on credit cards. I don’t like that feeling of insecurity and fear. So, having a nest egg is the priority for me and my family, right now. Once we have a nest egg and pay-off these cards, I will feel like we have a safety net. Then I may (or maybe NOT) return to my original priorities.
I want to be debt free but it is impossible when cards are maxed to over 10,000 in debt due to medical bills and the loss of income due to my husband’s disability and inability to work. I want to work towards paying off debt, just dont know how to do it.
Methods to make the most of your debt payment.
.round up the payment and pay that amt. You’ll never miss the $.
. Make a second or more Frequent payment Schedule Than monthly.
. Contact the loan company and put extra payments of money towards the principle. Check to make sure they do what you ask.
. List your debts in order by amount owed or interest rate. Your choice.
.Pay just over the minimum payment on all of them and put extra in the smallest amount or highest interest rate one.
.When the smallest/highest rate one is paid off, combine the payment u we’re making w the payment u r making on the next one on the list.
. Hold back some $ for an emergency.
In the last lesson, I noted that an outsider looking at my spending would note how much I spend on eating out. This is definitely not something I consider a priority, and in fact would like to spend significantly less than I do. I’m very reliable about meeting my monthly obligations, so it’s not interfering with that. But upping my retirement savings in my most important current goal, and I could save a little more for that each month if I ate out less. That would really be huge, because as we have learned that small amount will grow drastically over the decades. The other thing is that I am extremely frugal on most entertainment expenses, but it would be nice to build some more memories. Eating out less over the year could cover the cost of some things I would really enjoy, like season symphony tickets.
The most important things to us at this time are investing/saving for retirement, investing for our 3 young girls’ future education, and paying off our mortgage. We’ve followed Dave Ramsey’s plan for the last 7 years, gotten out of debt (except for the mortgage), and have tremendous financial peace, even during a time like the present. I would encourage everyone to read, listen to, watch, attend, and do his stuff and you’ll never be sorry you did in 5, 10, 20 years down the road! 🙂
Most of the family budget is going to paying off the mortgage. That is what is most important to me
Paying off the mortgage is important to me. And this is reflected in my spending now. However there are some repairs that will need to be taken care of. I will need to watch my current spending to see where I can take some out of the envelope and put it into a “Repairs” envelope.
Hi My name is Sonia . Iam 43 years old . I have got 4 beautiful girls . For me what is really important for me first is my healthy and my children . Another priority I realize myself that is really important for me my house .Another eg : as well pay your bills another priority, . Budget for education . Iam trying still understand my budget I believe no lost myself in same ways . I want build my knowledge how to budget more for better future. I want join the class and understand more . Car is not priority example. I want do better my budget .
My direction that I want to take is that of saving a bit more, in order to be able to enjoy a bit more freedom in retirement, rather than recklessly spending money on items that are not needed (they may be wanted, but not needed) and that don’t contribute in any way to ones overall happiness and fulfilment.
My Priorities also shift . Right now I am trying to break the cycle of living paycheck to paycheck. I want to start saving more so that I have more for buying Christmas Presents for my family and a future vacation.
I am 80 years old and my wife’s and my social security are our income. She refuses to come on board with the budgeting, so she just gets a weekly allowance for groceries and personals. She does very good with “her money”. I am trying to pay off some medical debt that is interest free, and just keep my head above water. Our car is old and needing expensive repairs, but I don’t have the money and can’t afford payments to get another one. I don’t know which direction may map is taking me. I trust that God is leading me in the right direction.
I like traveling and hobbies like kayaking, skiing a lot. And I do put money in hobbies as a big portion besides the living basic.
But I take improving live safety and quality as the most important thing.
So I decided to first spend my savings to exchange current small apartment to a medium size apartment even I am still single. It will give me more space when working from home, also closer to friends, more sunshine at balcony, more proper space to start raising a cat, and welcome my parents to 1-2 month stay during summer!
This change not only using my most savings but also meaning extra monthly cost 10% of my current salary.
While I am not going to sacrifice my saving plan after exchanging apartment, I need to bring down other cost. The first thing would be “eat out” but I will still keep the social purpose of eat out, so I need to squeeze other cost as well, then hobby comes next, the biggest cost is skiing. It do bring a lot of energy and happiness for me during dark winters, but I have to think about replacement (not fully, but not as often as I use to ski and the part spend on equipment I will see if buying proposer second hand will help).
My habits that seemed to be important to me were on necessities I needed, and I do believe these were important to me.
I definitely believe I have my priorities on things such as bills and necessities, so I believe it’s okay and good to spend money on those things. I think there are certain things I can cut back on for sure like holding on unnecessary household appliances, or trying to be more conscious about my transportation and fuel.
I think what’s really important is that even though I might have these financial mistakes or hiccups in my transactions, we’re all learning and we’re all growing. We’re learning ways we might’ve slipped up in our spending, but more importantly we’re sharing and we’re learning from each other to learn how or what we can do better.
The two things most important to me, are tithing (10% of gross salary) and saving for retirement, which, hopefully, will happen within the next five years (if the stock market will cooperate!). If we can see where we are spending our money, we can identify where we can cut expenses to stash away a little more money for the future.