Lesson Five – Prioritize!
Hey Hey Future Homeowners! You’ve had a day off, so let’s get back to work, LOL!
How was the Strategic Goal Setting assignment? I’m hoping fun, I love hearing my man and my babies’ dreams!
Remember I told you I’d tell you the secret-sauce to accomplishing all of my goals?
Here it is: I Prioritize them. Yep, that’s it!
One of my favorite quotes is: “You can do anything desire, but not at the same time.” So, I choose what I want to focus on for the year, break it down into 90 day mini-goals and I slay! 😊
Your next budgeting assignment is to Prioritize Your Goals.
I can’t tell you how many people write down what they want and get discouraged because they can’t accomplish it all right away.
Don’t do this. Focusing on a targeted goal is how they get accomplished.
Prioritizing your goals helps you to “plan” for the most important projects first.
The best way I can teach this is by example; so, here we go!
CASE STUDY #1 – THE BROWN FAMILY
Chad & Vickie Brown are a young, newly married couple. They are college graduates, employed, no children, and currently renting. Vickie has been considering home ownership quite a bit lately and after researching the costs, found that they do not have enough saved for both down payment and closing costs.
She sets up a meeting with Chad to see if they can afford to purchase a home in the next 3-6 months, and how much money they’d need to add to their savings account to cover their down payment and closing costs.
Vickie prepared a lovely dinner for them and sat down with both of their payroll check stubs, bank statements, and bills to create their family budget.
During their goal session, she discovered that her and Chad aren’t exactly on the same page (gasp! 😊).
They agreed to walk away, write down their own individual goals and prioritize them from 1-5.
This is what they found:
- Buy a new car asap. He’s had his car since sophomore year of college (6 years ago) and it is in need of major repairs.
- Pay off credit card debt
- Start a family
- Buy a home
- Pay off student loans
- Buy a home
- Furnish their new home’s living room and bedrooms with new furniture
- Start a family
- Start a side business to decrease taxes and bring in extra income (entry cost $10k)
- Take 2 vacations a year, one for the family, one for just the 2 of them.
NOTE: If you’re married you’ll find that you and your partner will share some of the same goals. The next task is to negotiate to see in what order they would be accomplished (prioritize!)
Chad works as an accountant at a local credit union and is making $42,000 a year, paid every two weeks. He is doing well in the company and has gotten two promotions since he started four years ago.
Vickie is an administrative assistant for the state government. She makes $45,000 a year and feels she has great job security. She gets paid on the first and fifteenth of the moth.
Gross Monthly Income: $6376.83
Net Monthly Income: $3,278.97
(Monthly Expenses: 2754.00)
Income Left Over: $ 524.97
Chad and Vickie have $524.97 that they can save for down payment and closing costs. They have a balance of $3146 in their savings account. At a savings of $524.97 a month, they could add $6299.64 to their savings account in 12 months, giving them a total of $9445.64 in savings.
Their credit cards will be paid off in 13 months if they pay the same amount that they are currently paying now (included in their monthly expenses). If they increase payments by $250, they can pay all of their credit card debt off in 6-7 months.
Chad is the only on with student loans. He is on the Extended Repayment Plan with a monthly payment of $82.14 a month. If he pays the standard plan, it’ll be $179.45 a month.
Here’s what they agreed upon together:
- For the next 12 months, pay cash for everything, no more swiping.
- Have all of their credit card debts paid off in 6 months (neither of them wanted to bring credit card debt into their new home).
- Keep student loans on the Extended Repayment Plan over the next 3 years, and revisit a more aggressive repayment plan at that time.
- Cut expenses so that they can put an extra $315 a month into their savings account.
- Have a total of $10,000 saved in 12 months from the date of the meeting.
- Research first time home buying programs that offer down payment assistance so that they didn’t deplete their savings during the home buying process.
- Chat with their realtor to have sellers contribute as much as possible to their closing costs.
- Take local trips that were less than 6 hours away once a year, 12 months AFTER they’ve purchased their home.
- Use their current furniture until they were in their home for at least 4 months
- Start a family a year after being in their new home.
They left the meeting confident that they were one step closer to claiming the keys to their new home. They agreed to meet bi-weekly to ensure they were on the right track.
Now it’s your turn 😊.
Assignment – Prioritize Your Goals
- Grab your list of family goals and your household budget.
- Together, begin to prioritize your goals in sequential order (from accomplish asap to accomplish in 3-5+ years)
- Begin to tweak your family budget so that it is in alignment with meeting the first task on your family goals sheet.
- Things to cut, things to reduce, actions to take to save more money (i.e. coupon, meal plan, etc.)
- Include ways to create additional income (coupon, meal plan, surveys, focus groups, overtime, part-time job, etc.)
- Write down the changes you guys agreed upon and on top of the paper, write the first goal that you guys are working towards.
- If you are married this is a good time to assign roles as well (you’re in charge of grocery shopping, you’re in charge of monitoring our bills to see how we can reduce expenses and save, you’re in charge of ensuring we stay on track savings-wise, etc.)
- Post in a public place, and consider making smaller copies to keep in your wallet, take a picture and have it as a picture on your phone screen, put on your steering wheel – you get the picture – make it visible.
- Schedule a specific day/time you will meet again, and how often (every week, every 2 weeks, once a month).
NOTE: Look at the projected Month/Year you wrote down to be in your new home. Is it realistic or does it need to be tweaked as well? Best to change it now so that everyone can remain motivated and on board.
Remember, the key to controlling your money is to give it a job. When it’s focused on a specific task it accomplishes all types of amazing things for you!
Alright, future home owner, time to put in the work! Be sure to post to the group at least THREE things that you plan on implementing to become in complete control of your dollars.
Looking forward to seeing your responses!
Tomorrow we are going to dive into using your budget to determine How Much Home You Can Afford.
See you at 10am!
NOTE: If you’re in the Intensive, make sure to review the additional tips I left you in your workbook.
Your Partner In Prosperity,
P.S. Who do you know that needs to Claim the Keys to Their Future Home? Grab ’em and give them this link: bit.ly/ClaimMyKeys!