I suppose I should try to establish credibility on the subject, but suffice it to say that I spent a lot of years paying off student loans! Money is a funny creature and I stay stumped about how it works. In fact, it seems like I can take $ 500,000, build a house, and then sell it…which isn’t much of an issue until you notice that $ 500,000 is now out in the economy through the workers, suppliers, etc. But, I also have $ 500,000 from the sale (I’m not good at selling!). And, there’s still a house sitting there worth $ 500,000 (or more). Now how does that work?
Here’s another curiosity about money and debt: Focusing on debt creates debt. What I mean is that it makes perfect sense to focus on paying debt off first, but it really never seems to work. Everyone I’ve ever known who made a commitment to pay off their debt as their sole focus…found their way into debt again. Mathematically, it makes sense. You have only “so much” you can put toward debt reduction. If you put ALL that money toward debt reduction, you save the interest you would otherwise be paying, etc., etc. The problem, however, is not with the math, but with human nature.
Human nature, being what it is, demands that we ALWAYS save alongside debt reduction. I don’t care who you are or how you think it works…if you don’t save (something…even 25 dollars a month) alongside paying off your debt, then you’ll never get debt free. I don’t know if it is the establishment of a new habit, or the fact that “you reap as you sow,” but I do know this makes all the difference in the world.
Start saving now. It does establish a habit. It does create a safety net. It does do all kind of things, but most of all it changes the way debt feels. I believe that as we get out of debt AND save money, a magic sense of hope returns…and a new sense of the possible grows. On the other hand, if we reduce our debt without saving, soon the pressure is relieved and we feel free to “add a little more” debt (I guess because we proved we can handle it).
Here’s the easiest thing to do: Set up an automatic draft on the 20th of each month from your checking account to your savings account. How much? Who cares, probably about a 3rd of the money you want to use to get out of debt (if you’re there yet). The amount eventually should be around 10% of your income (I know somebody will love a specific number). Basically, some is good, more is better.
I’m not offering an idea here for every issue related to money, but I’m hoping you’ll find this helpful…and…send it to a friend who might find this of interest too!
God’s best,
Fred
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