Newspaper article The Florida Times Union

Setting Budget Priorities All about Making Choices

Newspaper article The Florida Times Union

Setting Budget Priorities All about Making Choices

Article excerpt

Byline: Martha Cox

Stephen Covey, who famously wrote "The Seven Habits of Highly Effective People," said: "The key is not to prioritize what's on your schedule, but to schedule your priorities."

While this is fabulous advice for time management, it also applies to money management.

Whenever someone begins their budget, the starting point is identifying goals, both short and long term, because goals are our priorities. Common goals are paying off debt, owning our home, saving for retirement, getting our children through college without student loan debt, and maybe a luxury or two, such as a vacation or a night out.

When we start adding up the costs of our goals, we see the harsh reality that our income may not cover everything, which is discouraging. But that's when we need to begin setting priorities, which is all about making choices.

But we have to begin by being absolutely clear about where we actually are, which may not be pretty. I'm not sure who wrote this quote, but it's true: "You are free to choose, but you are not free from the consequences of your choice."

We can only start from where we actually are. The best advice I've gotten for these times came from my good friend Sherry who constantly reminds me that I can only accomplish one thing at a time.

Given that we may not be realistically able to accomplish all of our dream goals fully, that doesn't mean we can't accomplish modified goals. And this is where making good trade-offs comes into play.

If we have unsecured debt, we generally need to tackle that first. Unsecured debt occurs when we use credit to buy items that are not assets, such as a house or even a car. Previous bad habits tend to catch up with us here. But for a lot of people, the financial crisis caused them to use unsecured credit for regular living expenses. If they have now recovered their previous income, then discipline to reduce other expenses is required to get that debt paid off. …

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