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.