I had never considered prioritizing my spending in this format–I think it’s great to look at your financial situation from a lot of different angles, and this is a great one.

I think people will categorize their expenses in different stages based on their own situation. We have to be honest with ourselves and not “cheat” by putting something in a lower priority than it truly deserves. I’m glad you put retirement and emergency savings as #1.

Most of us won’t get much benefit out of analysis paralysis and active management. In my opinion, the most important factors in reaching an investment goal are:
1) Are you actually saving/investing (enough)?
2) What’s the mix of stocks/bonds/cash?

Individual investment selection and timing are less important than the two above. Spend that energy on understanding your spending (or other #1 and #2 tasks) instead.

Sure, maybe you can do a little better if you choose “Large-Cap-Value Investment A” vs. “Large-Cap-Value Investment B” – or “Index Fund A” vs. “Index Fund B”. Only the future will tell. A better bet for my money is doing a reasonably good job setting up the investment mix and then devoting time and energy to finding the money to save and invest. Or you could just enjoy some recreation.

While those of us who have 2% cash back just sit there smugly. ;)

Couldn’t resist. :D Good post!

-Erica