Optimal Allocation // The Art of Turning Your Increase into Greater Financial Abundance

Immediately after getting married, my husband and I sought to purchase our first home.  The problem was that we lived in a city with unusually fast-rising home prices.  Oh, did I mention the fact that we bought at the tail end of a housing bubble?  Interest rates were high and prices were extremely inflated.  After a brief search, we found a home that we loved at first sight.

We were both making hourly wages at the time.  After running the numbers, I figured we could afford the mortgage although things would be tight and we have to be cautious with our spending.  I hated our loan structure. The interest rate was too high and it sometimes fluctuated depending on the market.  Then the bubble burst, causing our home to lose a ton of value.  I hated paying a mortgage for a home that was worth much less than I paid for it. I wanted nothing more than a chance to reduce the monthly payments to free up cash for other things.

Eventually, that day came.  After years of wishing to lower mortgage payment,  I was finally able to refinance.  Once the payment dropped,  my monthly income *technically* went up.  It felt amazing. I thought my life would be so different....but it wasn't.

Nothing really changed once the payment went down.  The money we saved monthly was quickly reabsorbed into our lifestyle.  I fantasized for years about having a lower mortgage, and when it happened....I let everything slip through my fingers.

Here's the good news.  I'm currently in the process of refinancing my mortgage once again! Dropping interest rates have presented us with yet another opportunity to increase our monthly income via a lower payment.  But, this time, I want to do things differently.

Instead of passively allowing the savings to dissipate into thin air, I want to act with intention.  In 2020, most of us will experience some type of change in our finances.  Maybe you'll get an annual raise. Perhaps you'll pay off a credit card or some other debt.  Each time one of these events occurs, you (technically) become richer.   But it's a small amount so most of us don't leverage it into something greater.

My mortgage payment will decrease by about $100 a month.  That's like receiving $1200 over the course of a year.  If someone gave me a $1200 check, I'd be faced with having to make a decision on how to allocate it.  But, since the money is coming in small amounts, it's easy to disregard.

But in actuality, that $1200 has infinite potential.
  • It can become seed money to launch a new product/business
  • I can use the money to take a trip to celebrate the new mortgage payment.
  • I can treat myself to a series of self-care treatments that I've always wanted.
  • I can gift the money to someone in my life who would benefit greatly from it.
  • The money could be placed in an investment vehicle that'll produce financial returns.
  • I could draft the money into a high-interest savings account and let it build-up.  It could eventually become down payment for a car or another major expense in the future.
The key is to allocate the money to create something new.  Money is a form of energy. It has the ability to create in powerful ways.  We often don't utilize the power of the small increases we receive.  Instead, we fantasize about being given large sums of money (like winning the lotto or landing a dream six-figure job) while completely ignoring the small increases that routinely show up.

From this day forward, let's implement the concept of optimal allocation in our financial matters.  Every single cent that enters our possession is meaningful.  Even if that money comes in the form of lower monthly expenses.  All it takes is a series of strategic decisions and we can completely shift the direction of your lives.  

We often hear stories of people who receive a lump sum of money and use it to create something great.  Unfortunately, these types of events don't come around often so we can't wait passively for something that may never happen. 

Here's my advice.....make your optimal allocation plan now.  Think about what you'd do if you received a $500, $1000 or $2000 check today.  Is there a way to "flip" that seemingly small amount of money into something greater?  Mentally spend that imaginary money in a way that brings greater value to your life.  When the money does flow into your life (because it's highly likely that it will), you can immediately spring into action.   

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