A Good Problem to Have
The sun is shining (or at least it was) so let’s dispense with the gloom and doom today. What do you do after you have checked all the necessary financial planning boxes?
Your emergency fund is established.
If you have debt, your well-articulated repayment strategy is sensible and on track.
Your reality-based retirement savings plan is humming along. By reality-based, I mean that your contributions are based on an honest and comprehensive calculation of your actual needs, not some vague rule-of-thumb that you found in a Facebook group. (Plus a little extra.)
Your short term goals are completely funded.
With all of the above accomplished, you still have extra cash in your wallet at the end of each month. So now what?
It all comes back to goals. Seriously, just tell me what you want. Let’s start by revisiting that list above:
Does it make sense to accelerate your debt repayment? If we are talking about credit card or personal loan debt, a student loan, or even a car loan, then indeed yes. Do more faster! If it is federal student loan debt and you have reason to expect part of it to be forgiven, then no. If it is your mortgage…maaayyybeee?? This is a tricky, nuanced question (and I am now adding it to my future blog topic list).
Should you rethink the word “retirement”? If you love what you do, then I am all for doing it until you drop. On the other hand, even if you do love your profession, would you like the flexibility of doing less of it one day? Would you like the option of trying something new in the future before you actually leave the workforce entirely? Maybe creating an Early Escape Fund makes sense for you.
Of course, future college expenses if you have children. You have finally arrived at the point where you can get serious about this goal, not just tossing the random birthday gift money from a generous auntie into a 529 account.
What about your non-work related not so short term goals? Buying a home, or renovating the one that you are in? Not just taking an annual vacation (short term goal!), but a longer sabbatical? Starting a business? My friends, the world is your oyster. (I do not mean that the world is a cold, slimy, grey thing.)
Or maybe you let your lifestyle creep. There, I said it. If you have run through the list above and truly there is nothing there for you to do, then I suggest that you could just stop over-thinking things. My only counsel? Be wary of changes to the “infrastructure” of your spending plan. It’s one thing to add more restaurant dinners to your week or choose a more exotic vacation destination; it is another thing altogether to take on an out-sized fancy pants car payment. If your fortunes turn, how easily can you unwind your luxe life?
A final word of caution: Keep your ear to the ground for changes in your goals. A “I Have No Idea Yet” fund could be a great comfort. Just because you do not have a burning goal that is top-of-mind today doesn't mean you won’t wake up tomorrow and decide that yes, you too could be an Olympic cyclist.
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