This article will discuss practical advice for upholding your integrity by paying back those you owe while at the same time, planning appropriately for your own future so that you can provide security to yourself and those you love.
Unfortunately, many people focus too much on paying down their debts. They start taking actions to knock down their debt and make some great progress. However, after a short period of time, something happens that stops them in their tracks. They get busy with other things or an emergency comes up. Just like the weight after a crash diet, the debt comes back, sometimes even worse than before. Sound familiar?
A few people take the opposite approach. They save and invest for their future. Once they get comfortable with their progress, they loosen up a little. Soon, they are either borrowing money to invest more or they are just plain disregarding their debts, allowing them to grow out of control. Sound familiar?
Just like with weight and nutrition, the changes you implement to get rid of your debt, will need to be long term changes. You need to incorporate paying yourself first as a life long habit. Then, with the money that remains, you should create a plan to payoff your debts and pay back your creditors. This plan should include actual milestones and timelines to hit those objectives.
Paying yourself first should be a priority over paying off your debts. In a sense, if a creditor gives you a predatory loan, that you cannot pay back, their consequence for greed is a loss of their investment. "Pigs get fed and hogs get slaughtered." If you cannot afford to pay yourself first 10% of your income, creditors should not be loaning you money. Remember, you can always negotiate with creditors to reduce your debt but you will never be able to negotiate with custodians to increase your nest egg.
Some related articles are:
- What is John D. Rockefellers 10/10/80 Rule?
- 3 Parts to Jim Rohn's 70/30 Financial Independence Rule
- Should you pay off your home?
- Three Debts Which Will Kill Your Finances
- Isn't it Time You Joined the Debt Freedom Movement
This post was reposted from http://finlit.biz/retirement-2/debt-freedom-versus-paying-yourself-first/, originally written on July 23rd, 2013.
From Leah
Interesting reading. I think heard it somewhere before during a conversation I had. I this life is all we have and we should remember to place our value in people. Especially the ones that live and care for us whether we are rich or poor.
From Hannah
I agree except I worry that the whole system is gamed…the plutocracy has it all set up to work for them, and they throw us bones to worry about immigration or racism or sexism or abortion…anything other than rich peoples’ tax breaks. Those other issues are real. What should we regular people do?
From Scott Izu
The key to change is education. With better information, you can make better decisions. And believe it or not, if you want something different, it starts with you. Whether through reformation (internal change) or revolution (external change), you cannot change anything by yourself. For, united we stand, divided we fall.
Everyone can point out a problem, but a successful person sees a problem as an opportunity and focuses on not only pointing out the problem, but also providing a solution. Everyone can say they want change, but a successful person not only talks about change but actually takes action towards making a change. So my questions to you are: 1) What is your recommended solution? 2) What actions are you taking to get the result you want?
From Hannah
“What is your recommended solution?”
Education. Logic. Ethics.
Education: study and understand history. Yeah, it’s complicated. Get over that. Study. Plutocrats will win. Look at Rome. Be realistic. And remember that religion is about someone else’s power, not yours. It’s a bait and switch. Be generous and always, always care for the less fortunate.
Logic: whenever someone tells you to pay homage to something unproven or faith-based or the like, they want you thinking about something other than what they’re doing while you’re bowing down. Wake the fuck up.
Ethics: would you want someone doing to you what you’re doing to them? Why are you thinking about someone else at all? Be good. Be kind. Think about whether any choice you make is something that you wouldn’t mind someone doing to you.
I became a vegetarian about 20 years ago. I would never require that someone else to do what I chose. But as I get older, I am not sure I shouldn’t….
Above all, be kind. I experience this rarely, and I wish that what doesn’t kill me makes me stronger. But what experience actually tells me is that people are hypocrites. I want to be better than that, and I wish everyone felt that way. Am I alone? I hope not…
I hope that someone envisions a future as I do, with love and understanding and the concept that despite differences, we can find a better place and finally be happy.
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