Whenever we talk about making financial choices, everyone thinks there's a "correct" answer. And, mathematically, there may be. But no matter what your situation, the best plan is whichever one will motivate you to start taking action to improve your financial life.
Picture: Ken Teegardin/Flickr
As personal finance blog Budgets Are Sexy explains, there's a psychological component to saving money and paying off debt that is often overlooked. You can't build good habits overnight, and every bit of motivation you can conjure will help. If a particular plan gets you excited or motivated to make a change, it's OK to pursue that plan, even if it's not the most perfectly optimised one:
Yes there's a financially "correct" answer to most of these which of course you have to factor in, but if you're anything like me* you get a LOT more accomplished when you're actually excited about what you're working on vs looking at the numbers only. I can pay off debt like a mother when I'm in the mood, and alternatively I can turn around and save-save-save as well if my priorities and interests change over the months. But it has to motivate me enough to take action!
Obviously, this doesn't mean that a total lack of impulse control is financially sound. But a savings plan that excites you or that you can feel good about is better than one you'll abandon in a couple months. Your motivation matters just as much to your financial life as the numbers do, especially when you're trying to change your habits.