As you continue to think about year-end decisions you want to make before the year closes out, it's fun when you know you've done all the things you want to be doing. You can start focusing on what we like to call abundance goals. This is fun because you're really thinking about prepaid future expenses. This is the one you've heard us use the analogy for, so a lot of you are already cueing the reindeer to go about it. We always say, just like on the airplane, you put your oxygen mask on your face before you put it on your kids. Now, when you get to step eight of the financial order of operations, you have taken care of your financial goals first. So it's okay to think about the kids and their college savings. And guess what, there's some good news in year-end planning. A lot of states give you tax deductions for funding those 529s. Now's the appropriate time to take advantage of that. Or maybe you've been doing that, and you're thinking, "I've got some big vacations I want coming up," or maybe this is the time we want to upgrade the automobile or maybe buy a second home, or maybe I want to start investing in rental property. Year-end and step eight is a great time to be thinking about those things. If I have a big bonus coming in, do I want to put in the swimming pool, and how much of that bonus is going to be able to put aside to accomplish some of these abundance goals? Well, also use this as a moment to just self-analyze and reflect on what abundance means for you because we all know that money is just a tool. You're going to find out that abundance is really the intersection of having a purpose with your money. So this is a great time to think about what that means for you. Then, as you figure that out and as you begin rounding out the financial order of operations
, you're officially at the point where you get to choose what you want to do with your dollars. If you know you've done everything you're supposed to do the way you're supposed to, you get to choose. What are the things I want to do?
One of the things you may start doing as you begin to land this plane is you start thinking, 'Hey, I ought to pay off some of that low-interest debt.' Well, the lowest interest that I have is the 3% mortgage that I refinanced a number of years ago. Should I consider paying this off? If that's where your mindset is, step nine of the financial order of operations
, where you can begin to have the freedom to make those decisions without worrying about sacrificing other areas of your finances. It's unique because we know the majority of people with mortgages right now have some of those lower-interest mortgages. But I do want to give people the understanding; there's a reason this is step nine. This means you've already gone through steps one through eight of building your financial foundation. So, this is moving beyond get-rich activities; this is more of a stay-wealthy activity because you are minimizing risk and other things. But I want to caution people; do know that this is something that I would love for you to focus on if you're 45 and above.
A lot of people, if you hit this too early before you've actually saved 25% of your gross income and done all the get-wealthy activities, you might be circumventing or working against your future self. Now, with that said, if you are a person that has gone through steps one through eight, you're 45 and older, and now it's just a matter of checking the box on the bucket list, I'm not going to be mad at you. Now, I will tell you, self-reflection; Bo and I have had so many debates on this. He knows I have a 2.5% mortgage. I only owe less than $200,000 on a house that's worth substantially more than that. I have enough cash; I could stroke a check for it. But now, I'm making 5.25% on my cash; it's hard to walk away from it. So here's what I'm doing. I don't mind being self-reflective with you guys. At some point, the Federal Reserve is going to cut rates again. When we get to the intersection point that now my cash is no longer earning what my mortgage is, I'm just going to stroke a check. That's what I've done because I can't walk away from that 3.5% arbitrage problem I have right now. For more information, check out our free resources