Don’t let personal finance money management temptations lead you off the path to financial success. Once you’ve embarked on a journey of getting out of debt, your money management skills will be put to the test. As you start paying off your debts, you’ll be tempted to overspend and undo the good you’ve done.
"Money was never a big motivation for me,
except as a way to keep score.
The real excitement is playing the game.”
- Donald Trump |
Key point: You must continue to stick to the budget! Here’s how the process of getting out of debt should work: You make a list of all your debts, from the smallest to the largest. Then you aggressively pay off the smallest one, paying absolutely everything you can on it every month until it’s gone, while paying just the minimum on the others. Then, when that debt is paid off, you take the money you used to spend on it every month and start spending it on the next smallest debt. And you go on in that manner, creating financial momentum as you tackle larger and larger debts. The test of your personal finance money management skills comes after you’ve paid off that first debt. You’ll get to the end of the month and realize you have some money left over - the money you used to have to apply to that debt. You’re SUPPOSED to pay it toward the next-smallest debt now. But you’re tempted. It feels like “extra” money, like bonus money. You’ll feel tempted to spend it on something fun instead of putting it toward your next debt. Don’t succumb to the temptation! It’s OK to treat yourself from time to time. Any nutritionist will tell you that a Nazi-like devotion to a diet never works. You have to allow yourself the occasional treat. It’s the same way with personal finance money management. If you don’t allow for little splurges here and there, then when you DO splurge, you’ll feel discouraged, as if the sacrifice isn’t worth the gain, and you will run the risk of giving up. So let yourself do something a little frivolous if you must. Go out to dinner, or buy something you’ve had your eye on - within reason. But most, if not all, of that “extra” money MUST go toward your next debt. That’s the whole point of the strategy, for the money to get more “momentum” every month. Think how much sooner you’ll be out of debt completely. Remember how much you don’t like having to sacrifice to get out of debt - but how the more you sacrifice, the sooner it will be over. Personal finance money management, budgeting - they’re not always fun activities. However, the rewards are so worthwhile. The feeling of being debt-free, of having no financial obligations anymore, is a great sensation. Keep your eye on that goal and pay off those debts as quickly as possible!
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"Money is better than poverty, if only for financial reasons."
- Woody Allen |
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Debt is NOT your friend. It's not a wonderful "tool" for building wealth. That's a myth.
