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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.

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