First priority -- lose fat or gain muscle??

Your ratios of BF% to weight may not work. They result in approximately the same amount of lean mass and it is unlikely you'll meet this goal. What is more likely to happen, is that if you target weight loss only, then your lean mass will also decrease so once you're at 123#, you BF% may still be above 20% because the lean mass has decreased too.
Conversely, if you target muscle gains (where weight loss may occur) then your weight may stall at 130# but your BF % may decrease because your lean mass increased.
It's really a balancing act. The latter scenario may tip the scales higher but your clothes will be loose and your health better .... even though the BMI may not say so. The BF% will. However, the "loose 12# scenario", you will lose lean mass too which may make the scale look good, but that might be the only thing that does. Sure your clothes may well fit looser too .... but that may not mean you look good or are any healthier for it.

I would be okay with a higher weight (130). I will admit, not watching the scale is a new way of thinking for me. I always strived to be 118-120. It was a crazy internet calculator that told me 123 was do-able. I'm okay with my size now, i suppose, as long as I could get rid of the fat.

So -- I guess that means I should focus on the lifting. ???

You can do both. Here's the thing, the weightlifters will eat it caloric excess (to a point where their body is fueled and not gaining fat) to increase size, mass and in return, strength. While doing this, their cardio levels are very low and perhaps simply a 2 mile weighted vest walk 3 times a week. Nothing too much.
But if/when they want to drop weight (for certain performance) they will increase their cardio levels and potentially decrease the volume in lifting, but never actually remove their strength programming. They will lose weight, but their strength and lean mass will drop a little.
So, you can do both. Eat at a small caloric deficit so that you can loose some weight and both cardio and lift. Keep them balanced though, don't spend 17 hours on the treadmill and 3 with a barbell, or vice-versa. Keep it balanced, keep your body fueled and monitor for the results. If you find your scale going up but you like what you see in the mirror. Keep at it. If you don't like what you see, then decrease your calories and make some cardio increases.
But at the end of the day ... I don't know, so this is just my guesses.

The main point I wanted to get across, however, was that BF and Weight relationship.
I simply look at the scale as a guideline to see if my gain or loss is under control. I tweak my diet to adjust for what I want to achieve. More for some gains. Less for some loss. Understanding that if I lose too fast my lean mass will go and if I gain too fast, too much fat will come with that. (which is where the scale and tape measure can help).

Lose fat first... Easy as that...

Hoever try to maintain muscle mass! That is soo important... too many push that to the wayside and lose the benefits the extra muscle gives.

At first you can bulk up on a deficit because your a newbie. Once that stage passes, it is almost impossible to bulk up properly on a deficit, hence why I say focus on losing fat and maintaining LBM.

Once your happy with the fat, you will need to drastically up your calories in order to bulk up correctly, you will gain some mass, but then you start a cutting phase to get down again while maintaining etc.

First thing first, get rid of excess fat, then you can work on muscle. It is a fact you need an excess amount of calories in order to bulk up, and if you want to lose fat? That is not going to happen. Even on bulking phase, body builders gain a lot because of the excess. They just cut down a few weeks prior comp in order to get that cut look and even dehydrate to get a better looking physique closer to the time. However the key thing is, they pick up body fat when bulking up.

Now I don't know about anyone here who comments, however I am sure a Mr Universe contender and winner knows what he doing when he says he cannot build on a deficit while getting ready for comp he just tries to maintain the mass he has even though he does lose mass.

Fat first, muscle later. You will thank yourself. Do strength training, but do not make it such a focus on gaining mass until your ready to do so.

Just keep in mind you can lose weight, lose fat but also maintain or raise your bodfat% your best bet is to focus on both and find a program that will maximize your time in the gym.

Almost in the same position as you but i'm a bit heavier. I'm itching to get rid of some more fat so I can start building some muscle. I know exactly how I want to look in my head. I just keep at it and slowly my bf is reducing. I eat at a 300 cal deficit under my TDEE, lift heavy 3 days a week and chuck in a bit of cardio as well (HIIT plus other bits), high protein and try and have a cleanish diet. I'm just concentrating on bf reduction until I'm happy with what I see in the mirror. It may take a while yet lol. Good advice on this thread. Me likey ;-)

It depends on what your priority is! Although you can (relatively) maintain current muscle at a caloric deficit, its nearly impossible to bulk without a caloric surplus (meaning you have to be eating above you TDEE). I might be wrong, but it sounds like you might not want to BUILD muscle persay, maybe you just want your current muscle to show more (more definition)? If thats the case, then focus on a calorie deficit (20-25% below TDEE).

However, in my case, I want to bulk, I want more muscle! Therefore, my focus (in the very near future) will be eating at a calorie surplus and building as much muscle as I can, and then in about 3 months, I will do a 4-5 week cutting phase in which I'll cut my fat mass but try to maintain my increased muscle mass as much as possible, realizing I probably won't be building much more muscle mass during this phase.

Its all about your priorities- bigger muscles or lower bfp! Hope this makes sense

Bump

Bump....I'm at the point where I've reached my goal weight, but want to built muscle mass. I've been afraid to give up cardio entirely. I went from 60 minutes to 45 minutes per session. Not only does it help with weight loss, but I like the feeling it gives me and exercises my heart.

I'm 5'6" and 136 pounds and 20.7% body fat. I'd like to stay about where I am, but get stronger.

If you want the cardio feel while weight training, just do compound moves (lower and upper body together). You can easily get your heart rate up.