Article Series: Discover the Best Australian Personal Budget App for Your Finances!

MoneyFormula App

PART 2 - Achieve Your Wealth Goals & Save Thousands with the Personal Budget App

Personal Budget App Bob & Jill Finances.

Bob & Jill's Story

In PART 2, Bob & Jill discover they can crush their debt 3 years and 8 months sooner as they save over $73,000 using the Personal Budget app.

Personal budget app topics covered in this MoneyFormula article:

Real-time wealth goals

Choosing a goal

The Debt Free Plan

The Debt Crusher

Debt snowball amounts

New to MoneyFormula? Find out how to supercharge your personal finances and unlock the thousands of dollars you are missing out on: Personal Budget App Overview.

Article Series: Discover the Best Australian Personal Budget App for Your Finances!

OVERVIEW - Personal Budget + MoneyFormula App

PART 1 - Personal Budget App Bank Accounts & Debts

PART 2 - Personal Budget App Wealth Goals

PART 3 - Personal Budget App Emergency Fund

PART 4 - Personal Budget App Budgets & Buckets

PART 5 - Personal Budget App Savings Goals

PART 6 - Personal Budget App Net Worth

PART 7 - Personal Budget App Paying Down Debt

PART 8 - Personal Budget App Mortgage Free

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If you've read barefoot investor or would like to manage your money like a pro, MoneyFormula will make your life easy and help you save! My experience has been fantastic, and any questions I had, Matthew was able to answer efficiently. Could not reccomend MoneyFormula enough!

Real-Time Wealth Goals in the Personal Budget App

In PART 1 - MoneyFormula Bank Accounts & Debts we met Bob & Jill, set up their accounts in the personal budget app and put together their first budget which included their income and the $50 a month they want to put towards their Wealth Goals bucket.

Now we are going to look at just how easy it is to pick wealth goals, including crushing debt and setting up an emergency fund, and see how MoneyFormula instantly maps out the future in real-time as to when we will complete each goal and how much we will save.

Let's start with Bob & Jill's first question "will $50 an extra a month make much difference in paying down their bad debts?"

Choosing a Goal in the Personal Budget App

From the personal budget app dashboard let's navigate to the Plan My Goals section and then view the list of goals.

Personal Budget App Wealth Goals - Navigating to the Plan My Goals section.

Goals for Crushing Debt

To start with Bob & Jill want to know about crushing their debt, so all we have to do is go into the personal budget app list of goals and select the "Crush Bad Debt" and "Crush My Mortgage" goals.

Personal Budget App Wealth Goals - Goals for Crushing Your Bad Debts and Your Mortgage.

If we expand the Crush Bad Debt goal we can see it has selected a debt strategy of smallest balance first it has automatically included our three bad debts (the two credit cards and the personal loans we entered in PART 1 - MoneyFormula Bank Accounts & Debts of this personal budget app series).

Personal Budget App Debt Strategy and Crushing Bad Debt Goal.

Personal Budget App Wealth Goals - Crush Bad Debt Goal Debt Strategy and Bad Debt Accounts.

TIP - In PART 7 - MoneyFormula Paying Down Debt we'll look into the different debt strategies you can use to pay down debt and how to manually add and remove debts from the goal.

Wealth Goal Summary

If we go back to the Wealth Goal summary in the personal budget app we can see at the top of the screen the extra $50 of income we are allocating a month and the 100% debt snowball percent (I will cover the snowball percent in more detail later in this article).

Personal Budget App Wealth Goals - Goal Summary with Income Allocated, Snowball Percentage and Active Debt Goals.

... and at the bottom of the screen we can see our two active goals along with when they will complete.

TIP - If you are following Barefoot Investor approach then this is your Fire Extinguisher in action, with the list of goals you have choosen and the fire extinguisher amount being applied to each goal in order, along with when they will complete.

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The Debt Free Plan in the Personal Budget App

With our goals set up it's time to start getting answers; and first stop is the Debt Free Plan.

The Debt Free Plan will provide us with a really good overview of what the $50 a month is going to achieve, including a comparison to the bank's way of doing nothing.

We can see in the personal budget app below that we will be debt free sooner 3 years and 8 months and save over $73,000 in interest charges.

Personal Budget App Wealth Goal Debt Free Plan.

Personal Budget App Wealth Goals - MoneyFormula Debt Free Plan.

Debt Free Plan - The Bank's Way

If we view the Debt Free Plan detail screen we can review what the bank has planned for us if we make no extra repayment and in the case of Bob & Jill they will be kept in debt another 27 years and 1 month and the bank will charge them another $494,621 in interest.

Looking at the personal budget app screen we can also see that it will take 1 year to pay off their first credit card and over 3 years to pay off the personal loan.

Personal Budget App Debt Free Plan Bank's Way.

Personal Budget App Wealth Goals - MoneyFormula Debt Free Plan Using The Bank's Way.

Debt Free Plan - Current Bucket Percentages

By comparison if we look at the personal budget app results from just $50 extra a month (and the 100% debt snowball) we can see the first credit card will be paid off in 4 months and the personal loan in 1 year and 5 months, along with over $73,000 in savings, which is a HUGE difference.

Personal Budget App Debt Current Bucket Percentage.

Personal Budget App Wealth Goals - MoneyFormula Debt Free Plan using Current Bucket Percentages.

Debt Free Plan - Target Bucket Percentages

The debt free plan also shows us what it would look like if we could put the Target 20% of Income towards our Wealth Goals bucket, which is $1,900 for Bob & Jill based on their current income (refer back to PART 1 - MoneyFormula Bank Accounts & Debts for Bob & Jill's bucket percentages).

At $1,900 per month, the personal budget app shows us that Bob & Jill would save $301,010 in interest and cut over 15 years and 4 months off their debt.

It would also evaporate their debt with the personal loan paid off in 2 months and even their mortgage repaid in just 11 years and 9 months.

Personal Budget App Debt Target Bucket Percentage.

Personal Budget App Wealth Goals - MoneyFormula Debt Free Plan using 20% Target Bucket Percentages.

Debt Free Plan - Custom Bucket Amount

While the target 20% percentage would be life changing for Bob & Jill, it is not something they can achieve just yet. However, the Debt Free Plan allows a custom amount, that can be set to any value, to help motivate them to take the next step.

Therefore, while Bob & Jill are very happy with the $50 a month, next they will set their custom amount to $100 in the personal budget app to see what would happen if they could save a little more each month.

Straight away MoneyFormula shows them the $100 a month would increase their savings to $87,512.

Personal Budget App Wealth Goals - MoneyFormula Debt Free Plan Using $100 Custom Bucket Amount.

TIP - In PART 4 - MoneyFormula Budgets & Buckets of this personal budget app series we will see exactly how they find the extra $50 a month and then lock in this new $87,512 of savings.

The Debt Crusher in the Personal Budget App

Next we are going to look at the Debt Crusher which gives us a break down of when each debt will be repaid along with the total interest we will save.

In the case of Bob & Jill, looking at the personal budget app we can see their four debts on the chart (the two credit cards, the personal loan and the mortgage) along with when each will finish.

Personal Budget App Wealth Goals - MoneyFormula Debt Crusher Charts the Four Debt End Dates.

Debt Crusher by Debt Type

The Debt Crusher detailed screen in the personal budget app also provides a breakdown of the results by the different debt types including Bad Debt, Mortgage, Investment Loans and Other Debt so you can see when each group of debt will be repaid.

Personal Budget App Debt Crusher Debt Type.

Personal Budget App Wealth Goals - MoneyFormula Debt Crusher by Different Debt Types.

The Debt Crusher works nicely with the Debt Goals, as both focus on the debts in a given debt type. So for example, if you are currently focusing on Crushing Bad Debt the Bad Debt section of the Debt Crusher will help you dive into the details and tune your goal.

Debt Snowball Amounts in the Personal Budget App

Next let's take a quick look at the power of debt snowballing and how it works in the personal budget app.

Each time you pay off a debt, the minimum payment becomes available in your budget to use on other things. For example, if you are paying a minimum $100 a month on one of your credit cards and you pay off the credit card, you will have an extra $100 a month available to you.

MoneyFormula debt snowballing is about taking some or all of this money as it becomes available and pushing it back into your goals.

Debt Snowball Example

Using the Debt Crusher let's work through a Debt Snowballing example using Bob & Jill's Debts in the personal budget app.

We can see below their first credit card has a minimum payment of $25, as well as the extra payments of $50 a month from their income they are putting towards their wealth goals. In 4 months this credit card will be paid off.

Personal Budget App Debt Snowball Second Credit Card.

Personal Budget App Wealth Goals - MoneyFormula Debt Snowball Example First Credit Card.

Snowball to Second Credit Card

Bob & Jill have the MoneyFormula debt snowball percent set to 100%, therefore ALL of the minimum payment will be rolled over, and we can see below the calculations automatically take the $25 when it becomes available and add it to the extra repayments for Credit Card 2.

Personal Budget App Wealth Goals - MoneyFormula Debt Snowball Example Second Credit Card.

When the second credit card is paid off then the same thing happens, and this time the $110 minimum repayment becomes available and is applied to the personal loan. So now the personal budget app starts using the extra $25, from card 1, and the $110, from card 2, as snowball amounts in the calculations.

Snowball to Mortgage

We can keep applying the snowball amounts from goal to gaol, so by the time we get to the home loan we can see that instead of just $50 extra a month from our income we now have a total of $253 a month working for us ($50 from our income and $203 from snowballing).

Personal Budget App Debt Snowball Mortgage Loan.

Personal Budget App Wealth Goals - MoneyFormula Debt Snowball Example Mortgage Loan.

Snowballing can be a great way of increasing the monthly amount you put towards your MoneyFormula Wealth Goals and help move you closer to your Target percentages.

This approach can be easier than trying to find money in the budget by cutting back and making savings, because as you free up money that was otherwise just going on debt you put it to a smarter use before you are tempted to spend it.

Or better still, do both, by finding extra money in your budget and debt snowballing as you pay off debts.

TIP - MoneyFormula gives you full control on the amount of snowballing you want to use in the calculations. You can set a value globally, at goal level or even down on each individual debt and we will cover this in detail in PART 7 - MoneyFormula Paying Down Debt.

What Next?

In this article we've seen the impact Bob & Jill's $50 a month will have on their wealth goals and paying down debt using the personal budget app. They are super happy with the $73,000 savings they can achieve and already have their eye on their next target of $100 month so they can increase it to over $85,000.

But first, they want to use the personal budget app to find out what it will take to set up an emergency fund so they are protected from a future financial crisis.

TIP - For full details on Bob & Jill and their journey from crisis to success, tune into the Roadmap to Success video series available from the MoneyFormula App dashboard.

PART 3 - Secure Your Future with Your Emergency Fund

In PART 3 - MoneyFormula Emergency Fund we'll add two more wealth goals in the personal budget app to Bob & Jill's list, the "Create Safety Net" and "Top-Up Safety Net", and instantly find out when their Emergency Fund will available using their existing $50 a month and 100% debt snowballing.

Article Series: Discover the Best Australian Personal Budget App for Your Finances!

OVERVIEW - Personal Budget + MoneyFormula App

PART 1 - Personal Budget App Bank Accounts & Debts

PART 2 - Personal Budget App Wealth Goals

PART 3 - Personal Budget App Emergency Fund

PART 4 - Personal Budget App Budgets & Buckets

PART 5 - Personal Budget App Savings Goals

PART 6 - Personal Budget App Net Worth

PART 7 - Personal Budget App Paying Down Debt

PART 8 - Personal Budget App Mortgage Free

For more information on how to supercharge your personal finances and unlock the thousands of dollars you are missing out on refer to the Personal Finance App Overview.

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PLEASE NOTE: The information in this article is general in nature. It does not take into account your personal objectives, financial situation or needs. Please speak to a qualified financial adviser if you need specific advice on your finances.