I recently read a blogpost at Yes I Am Cheap (great blog by the way) about how the blogger had paid down $50,000 of her debt in two years. During this time she was unemployed for six months and held a temp job for another 9 months. Now she outlines specifically how she did it, but for me the primarily lesson I got from her overall post was the notion of priorities. I think that a lot of our financial health, paying off debt, and life in general is about priorities. What specifically are your priorities when it comes to your financial health?
For me it is achieving financial independence. To me that is reaching a point financially where I don’t have to work. It means becoming debt free and having my investments cover the daily expenses I have in my life. One of the reasons I am tracking my spending habits is to determine patterns what those spending habits are in general. Then from those patterns I can make decisions about how to curtail some, increase others, and leave others alone. Tracking your spending is easy if you use a free software like Mint.com or more of a specific budget software like You Need A Budget.
Coming back to the idea of priorities I am not saying that there are some people who don’t have dire financial circumstances and will have a really difficult time becoming financial independent, but I think a lot of our financial stress comes from the priorities we set. Frankly, for many getting out of debt or saving more for retirement is less of priority than doing certain things in their own lives. That could be wanting to lease a car every three years. It could be wanting to have a bigger house than one needs. It could be shopping for certain items or having a deluxe phone plan or taking a dream vacation or whatever. But becoming financially healthy, like a lot of things in life, is about priorities. Now there are specific means of achieving those priorities and I think Sandy at Yes I Am Cheap provides a great specific plan for goal setting regarding your finances. Or maybe you turn to Dave Ramsey, Ric Edelman or some other financial guru. Maybe you read more financial blogs like Mr. Money Mustache or Mr. 1500 and that lights a fire under you. Whatever it is I am convinced that a lot our financial behavior is due to our priorities, conscious or unconscious. You can change your priorities. My priorities have changed and they will probably change again depending on my familial situation.
What are your financial priorities? Once you identify that then you can begin reading, studying, and planning to achieve them.