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No. of Recommendations: 4
The reorganizing of financial priorities is one that we all have to face at some point in this journey, so on that note I'll turn this one over to the floor.

I've always been most concerned about transitions. When I retired my mortgage, I spent a lot of time allocating the cash flow to the brokerage account, the new self-escrow account for taxes & insurance, and general savings. The idea was to make sure that all of the cash flow went to some form of savings and none of it leaked out into increased spending for no visible benefit.

I'm not theoretically opposed to increasing spending when a major debt is retired, but I do think that any increased spending should be a planned budget adjustment rather than a default increase because you feel rich. Hypothetically, suppose you have a snowball of $1500 when you retire the last debt. I can understand saying, "We've been living cheap to retire debt, so we want to add $300 to our monthly budget for spending that we don't have to track." The point is that this should be a concious allocation of a specific amount based on a decision that this is the most important use of those funds for your life situation.

I'm also a big believe in spreading the savings snowball around. Put a bit in the brokerage account, put enough in the escrow/freedom fund, build the e-fund to a level you're comfortable with, put some in the retirement accounts. The amount you regularly put to each purpose is easy to adjust if you decide later that a different allocation is better; but it's kind of a pain to set up a Roth IRA, start participation in an employer's 401(k), start a brokerage account, etc. Get the savings vehicles set up and get into the habit of putting something towards each of the savings vehicles that is important to you. Then when life changes--the last higher-rate CC is paid off, the mortgage is retired, you get a raise, whatever--it's easy to adjust how much you send to which savings vehicle. If you pay off the debt and then decide to set up a Roth IRA, it's too easy to let a month or two of the snowball get frittered away before the paperwork is finished.

As to how the various goals should be balanced, I think the allocation is very specific to your individual situation and temperament. I hate debt, which is a big part of why I don't have any other than current month CC charges. I want a large e-fund, because I have seen an e-fund of 8+ months' salary eaten up by the Mother of All Emergencies. I want to fund retirment accounts as much as I can. And I need to be concerned with getting my daughter through college and launching her into life as an independent adult. Against this background, my "snowball" is going towards retirement savings and e-fund. At some point, it will make sense to put some of it towards non-retirement investments; I hope to recognize that point in a reasonably timely manner.

Patzer
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