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Bigger Goals Yield a Bigger Payoff

Every quarter I share a budget review on my site. I do this for two main reasons:

1. I’ve received a lot of great feedback from readers who say I’ve encouraged them to start reviewing their own budget regularly.
2. It provides accountability for reaching my own financial goals.

What are your priorities?

For the most part, the pie chart for my quarterly budget review looks the same. When there are outliers I explain what events happened that affected our budget (like refinancing the mortgage, joining a gym, buying a share of beef, etc). I’ve heard it said that the best way to see where your priorities are is by looking at your bank statement. Rather than giving readers access to my bank statement (yikes!), the pie chart does a pretty good job summarizing where we put our money.

20150729 - budget for health budget review

For the past 6 months we’ve put 13-24% of our income toward EXTRA mortgage payments in order to reach our lofty 2015 financial goal: Pay an additional $12,000 toward the principal. Next quarter will look a little different since closing costs to refinance will take the spotlight instead of additional mortgage payments but, again, it still reflects our priorities.

Setting realistic goals

If you don’t have a budget already established in some format, whether, Home Budget, Quicken, some other app, or an Excel sheet like me, how do you know where you stand with your finances? How do you set and track financial goals? How do you know how realistic your financial goals are?

Scenario #1:

Let’s say Dave and I didn’t keep a budget but we wanted to make extra payments toward our mortgage principal. We are starting the year with $100,000 left on our mortgage and we randomly pick a safe goal to pay $5,000 extra toward the principal. We would feel good about paying that extra lump sum and it would shave 3 years off our mortgage and save us an extra $7,000 that would have gone toward interested if we only made minimum payments until we got to $95,000.

Scenario #2:

Now, let’s say we DO keep track of our budget. We could look at the entire upcoming year, see how much we could realistically put toward the principal each month, and set our goal slightly higher for extra motivation. We find that we could gather up an extra $10,000 but since we enjoy a challenge, we up our goal to $12,000 ($2,000 more breaks down to an extra $166/month… for us this would mean selling a few items around the house or me working a few extra health fairs as a dietitian), we would shave off almost 5 years and an extra $14,000 that would have gone to interest had we continued to make minimum payments. That’s what just a one-year goal can do!

20120711 - need financial goalBigger goals = Bigger payoff

These are rough estimates but you get the point: setting bigger goals yields a bigger payoff. The sooner you pay off credit card debt, the sooner you can invest more in your retirement. The sooner you get rid of those student loans, the sooner you can feel peace from funding a 3-6 month emergency fund. Now, I understand that everyone has a different level of zeal when approaching goals and generally fall under one of these 3 categories:

1. Penny pinch until debt is gone
2. Pay extra but still have some “fun money” to spend
3. Make minimum payments so you can go on more vacations and buy what you want now.

We fall into category #2. Dave and I are both natural savers and thankfully we enjoy cheap entertainment like hiking or hanging out at a pool. However, we made the decision to set aside a lump sum each month for entertainment and a lump sum toward our vacation savings. We meet in the middle by being zealous with our goals but still “make” ourselves set aside fun money. We could buy a new set of patio furniture, but having this goal led us to search Craigslist for something cheaper (we ended up with a free set from our neighbor!). I could buy brand new clothes, but having this goal led me to find deals on Twice or Thred Up.

I find a lot of freedom knowing that we will be 100% debt free before our first child reaches her 10th birthday because we’ve set big goals from the beginning. Reviewing our budget on a quarterly basis has allowed us to check in with our financial goals and make appropriate changes. Keep in mind that bigger goals can yield a bigger payoff only when they are realistic goals. The only way you can know if your goal is realistic or not is by being able to review your budget and gauge what can be done. My initial thought when setting financial goals for 2015 was scenario #1 ($5,000 extra) but once we went through our budget we realized we could reach a much greater goal!

What big financial goals have you accomplished or are currently pursuing?



My name is Derek, and I have my Bachelors Degree in Finance from Grand Valley State University. After graduation, I was not able to find a job that fully utilized my degree, but I still had a passion for Finance! So, I decided to focus my passion in the stock market. I studied Cash Flows, Balance Sheets, and Income Statements, put some money into the market and saw a good return on my investment. As satisfying as this was, I still felt that something was missing. I have a passion for Finance, but I also have a passion for people. If you have a willingness to learn, I will continue to teach.


  1. Hey Derek,

    “Shoot for the moon. Even if you miss, you’ll land among the stars.” I love how this post captures this idea and also quantifies it as well. Like you said, $166 a month to do $2,000 towards your mortgage. That is not much and can easily be accomplished. Why not do it?

    Have a great day, I look forward to reading more of your content!

    • Glad you enjoyed the post, Erik!

    • You’re right, Erik. Big numbers can seem so intimidating but once you break it down to a monthly amount it looks much more doable.

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