Skip to main content

Earn It or Pay It – You Choose

I love cruises, but I avoid any port excursions where small boats are involved. I am not afraid of sinking; I am afraid of getting sick. I did that once, and it was not fun. But the thought of a sinking boat is a perfect analogy for why debt is bad. Stick with me, here. 

Let’s say you are in a small boat that is taking on water because there is a large hole beneath the water line. You have a bucket and are bailing as fast as you can, but your boat continues to sink because you have not plugged the hole. Even if you can toss out water at the same rate more water is pouring in, you will never be done. You are fighting a losing battle and are likely to become exhausted, frustrated, and disheartened.

Interest on debt will create the same affect on your budgets as does a hole in your boat. If you are trying to create financial stability while still paying interest it is next to IMPOSSIBLE to actually achieve that goal because you have interest hanging over you that never sleeps, never rests, and never goes away.  It just keeps accruing. As you try to pay it down, it is still piling up. You are now spending a great deal of your hard-earned money that could be used to support your family (or even do something special) paying interest on previous purchases.

While it is very popular, acceptable, and even seems to be normal to have a lot of debt, it is NOT in anyone’s best interest, no pun intended. Until about three generations ago, debt was viewed as a disgrace. Your grandparents and great-grandparents saved for things they needed, paid cash for almost everything, and would be ashamed of the way we’ve been spending now.

Albert Einstein once said, “Compound interest is the eighth wonder of the world. He who understands it, earns it … he who doesn't … pays it.” The only way to truly have financial stability is to put this principle into action and stop paying interest. To do this, you must STOP BORROWING. Most people don’t realize the most popular method of borrowing money is a credit card. Credit cards should not be confused with a debit card; they are not the same. To get in control of your money, you must STOP USING CREDIT CARDS IMMEDIATELY.

So, get out your scissors and have them ready for next week’s post, but don’t do anything rash yet. However, it is time for an intervention.

Comments

Post a Comment

Popular posts from this blog

Sunny and 75

While the Intermountain West has had slightly cooler climate than is typical for this time of year, I just know gorgeous weather is right around the corner. Today I wore flip flops in the rain just to make my point. And wearing open-toed shoes without socks is just one of the wonderful things you can do when it’s nice outside! I don’t know about you, but thinking about warm-weather activities makes me want to play hooky from work and play instead. But because I am an accountable adult (most days, anyway), I will NOT forsake my grown-up responsibilities (as bad as I might want to) in favor of longer days and spring and summer fun. I can work before I play. And so can you. Here is a short list of things you should check NOW before the weather gets too hot: THE CHIMNEY – climb on your roof (if it’s safe) or use binoculars to check the exterior, hire a professional for the interior cleaning GUTTERS AND DOWNSPOUTS – make sure they’re clean and make repairs as needed THE ROOF – it’s mu
Post a Comment
Read more

Who’s the Boss?

If you know me at all, then you know I love Dave Ramsey. In fact, I not only attended a Dave Ramsey affair when it once came to an event center near me, but when I went through Tennessee on a road trip, I hunted him down and visited his studio. I have a picture to prove it (well, it’s somewhere). I always listened to Dave when his show was featured from 1:00 to 4:00 pm on my local talk radio station. One of the things he said frequently (something that he actually borrowed from somebody else–John C. Maxwell) was, “A budget is telling your money where to go instead of wondering where it went.” If you are getting a tax “refund” this year, I will first invite you to review last week's blog post and the three links to previous blog posts. I would then encourage you to plan for that “refund” money, and I don’t mean blow it as most Americans will do. Be smart. Use it to pay off some debt if you, as most Americans do, have some. If not, save it appropriately.  We've discussed deb
Post a Comment
Read more

April Fools'

Warning: this material might cause anger and frustration in some readers. But don’t shoot the messenger here. Oh, how I wish I could tell you that this post is based on a joke, but I cannot because it’s the cold, hard truth. So here it is: if you have gotten relatively large tax returns in recent years, those days are probably far behind you. Don’t count on it this year. Things have changed. Our refunds will be much smaller for the 2022 tax year. Why? Many Americans thought that the stimulus payments they’d received were basically “free money” and were excited to get them at the time. But, unfortunately, nothing is ever free, and those stimulus payments are returning to bite us now. A couple of tax credits have expired ; the expanded Child Tax Credit and certain Covid-related breaks are no longer in existence. During the pandemic, the IRS also gave breaks to those who filed their taxes late. That, too, has been taken off the table. Sorry to be the bearer of bad news, but you
Post a Comment
Read more