I am one of those people who constantly questions my plans and their outcomes. I have noted that I play monetary mental gymnastics with myself all of the time. I am constantly reevaluating my plans of wanting to pay down debt or save or whatever. I run numbers through calculators, think about what it would be like if we paid off this or did this, or how much of an emergency fund I need, etc. I think it comes down to I want to do all of the things that I write about in here and I do to some extent. The problem is I want to do them at the same time.
For example, I want to pay off my student loan debt because I hate debt, but I know that financially the smarter move is to accept student loan forgiveness and just roll with the punches. In fact, if I did that I would probably be further along them I am at the moment, but instead of I have chosen different paths. Maybe out of stubbornness or ignorance or whatever, but that is what I have done.
I also want to have a proper emergency fund of at least 3-6 months of expenses to take care of the “four walls” that are needed in your house. If something did happen I seriously doubt I would worry about my credit card debt (if I had any) but rather worry about food, shelter, and clothing. At the same time, my job is pretty secure so I don’t dedicate as much time and energy to building up that fund. For example, I send a little extra to my wife’s car payment each month or a little extra to the mortgage. It isn’t much, but it could be used for that emergency fund instead.
Another thing I would love to happen and focus is paying off the house. I know the arguments about not having a mortgage vs. keeping a long one (ala recommendation from Ric Edelman). I even chose a new mortgage to save on costs, but that still doesn’t mean I don’t want it gone so that I could put that money toward other things, but because of student loan debt and because I don’t have a $153,291 (as of this writing) to pay off the mortgage right away I will have to learn to live with debt.
Finally, I discussed how this month could be problematic financially. The truth is that it hasn’t been so bad, but some unforeseen costs have forced me to over use our credit card to the point where I don’t know if I will have all of the money to pay it off at the end of the month. Something I hate, but those extra expenses needed to be paid for up front. I could’ve avoided this if I would have specific sinking funds (e.g. vacation, property taxes, etc).
So what does this entire discussion come down too? I think for me it comes down to this notion of focus. There is something very powerful on focusing on one goal and one goal only. That has always been hard for me. Even in my professional life I have 4 research projects going right now. And I feel guilty when I can’t get to them all.
The truth is I don’t have to get to them all. They will get done, but I choose the how and when, but when I start something I want to finish it and then move onto the next thing.
Maybe I have financial ADD (not to demean those with ADD or ADHD). But I need to learn to focus. Choose one goal and go from there. The problem is how do I decide which goal to proceed with first and then move on.
Oh the choices? Pay off debt first? Save that emergency fund? Increase retirement savings? Go after the house? Continue the 10% debt repayment plan per year? Which should I focus on first and then move to the next?
Part of the reason the debt snowball payment method works so well is because of the victories you achieve. Well I am at a point in my financial life that it will take months/years for those victories to achieve so I lose focus. I know it is part of the name of the game, but part of my financial journey and for my life is to learn to focus much more.