It's the end of the month. Tomorrow is Friday and a payday. Your checking account has $400, and tomorrow's paycheck will cover your expenses for the next two weeks.
You have a mortgage payment at 5%, a car loan at 4%, a credit card balance (although no trouble paying it off every month), a Roth IRA, and a money market fund earning <1 do="" excess="" following="" hich="" nbsp="" of="" p="" should="" the="" with="" you="">
1) Put it toward your mortgage;
2) Put it toward your car;
3) Put it toward your credit card;
4) Put it in your Roth IRA; or
5) Put it in your money market fund?
Did you answer? If so, you're not wrong! Aside from talking to a computer screen (which could be a little weird), the fact that you are living below your means with an excess at the end of the month puts you ahead of the game. Ideally, paying down the mortgage with a higher rate before the car loan would put you slightly ahead in the long run, but if that's the worst financial mistake you made, then again, you are still ahead of the game.
Financial success is often more about avoiding the wrong decision than making the right choice.
Many financial experts (and, according to them, financial studies as well) support the notion that periodic reallocation is more critical to long-term financial success than the investments themselves. Interesting theory, and considering I reallocate quarterly, I would be foolish to dispute it. In my past year of investing in individual stocks, I have felt the panic of making the wrong decision (and how it, ironically, usually becomes a self-fulfilling prophecy).
