Having lots of competing interests and goals can be stressful. Often we search for the One Right Answer, something for which we can be forgiven, even if the reality is there is no single correct way to manage your finances — different people have different circumstances, timelines, and resources.
One of the first things you should think about, however, is deciding which of your financial goals are most important to you to meet. That may require introspection, some math, perhaps a cold beer or two, and some self-examination.
You need to prioritize your financial goals to answer the most common questions directed at bloggers and financial professionals. How? Keep reading 'til the end.
Let’s say a 35-year-old physician investor earns $250,000 per year, owes $150,000 in student loans at 4.5%, has a $500,000, 3.5% 30-year mortgage, has two children (two and four), and wants to retire someday. Perhaps they write a financial plan that includes the following goals:
The doctor has five years to pay off student loans. That’s about $30,000 per year, plus interest. A simple spreadsheet calculation will tell them exactly how much they need to put toward those financial goals to reach them.
If you look at any of those calculations individually, none of them seem terribly unreasonable, right? But when you put them all together, it could cause a problem. Let’s add it all up.