Don’t Let Debt Eat Away Your Hard Earned Income

By Glenn Fisher, Editor at Creating Wealth

“I would rather go to bed without dinner than to rise in debt,” proclaimed Benjamin Franklin, one “I would rather go to bed without dinner than to rise in debt,” proclaimed Benjamin Franklin, one of the founding fathers of the United States of America.

It’s a noble idea…

If not a little militant.

I mean, being able to eat is pretty essential, and if you’re in such a bad way money-wise that you’re going into debt because you can’t afford to eat, then, hey, much more urgent action is required than reading Creating Wealth.

So, we should perhaps tweak Ben Franklin’s quote to read:

“I would rather go to bed without PUDDING than to rise in debt.”

You see, for the record, when I talk about managing debt, I’m talking to those who have got themselves in such a position due to overspending, rather than not being able to spend at all.

Nine times out of ten, I think if we’re honest, we get into debt because we want things immediately that we could otherwise have had later.

As I wrote before on this topic, we’re extraordinarily good at rationalising decisions that aren’t always good for us.

It seems great to have that ‘thing’ now — be it a holiday, a car, a newly decorated kitchen — but the immediate enjoyment of the thing will soon be outweighed by the lingering implications of the debt you took on to have it.

The problem with debt isn’t just that you’re in the red and a percentage of your income is being used to service the debt…

There’s the whole psychological worry of having the debt on your shoulder.

And you should never underestimate that psychological influence.

Though it’s easy to dismiss psychology as a bit wishy-washy, the fact of the matter is that any extra worry on your mind will limit your ability to innovate in another area.

You work hard to make the money you do — why let debt eat away at it and trouble your mind?

Indeed, stress and distraction are two of the biggest obstacles you face when it comes to achieving more in life and managing unwieldy debt can lead to both.

I speak from experience. I’ve been in bad debt and I’ve felt first-hand how depressing it can be. I did my best to try and pretend it didn’t exist, that it was OK, so long as I paid a bit off each month, I didn’t need to think about it.

But in pretending it didn’t exist, I wasn’t admitting what the debt really meant…

You see, even though you might feel as though you’re perfectly capable of managing the debt and servicing it each month, the fact is that by doing so, you’re stunting your ability to actually make more money in the long run.

It is such a waste of effort to develop extra income streams and see your income grow but not pay off outstanding debt. Because when you net out the whole thing over time, you’re down.

If you can use the extra money you make from extra income streams to quickly pay off any credit card debts or personal loans as quickly as possible, rather than using your money to service a debt, you can use the money to invest actively and get your money working for you.

Let’s say you make an extra £50 this week, from one of the ideas in 57 Wealth Hacks, that’s great.

Your first inclination will be to spend that as a treat or reinvest it in another income generating project. And if you’ve no debt, then great — do that (preferably the second option).

But if you’re also paying £50 a month to service debt, then you should put that money directly towards paying off the debt. That way the debt itself will reduce and so should your repayments.

It’ll feel like you’ve just thrown away the money you made, because you’ve got no immediate and tangible thing in return. You need to get over that. You need to realise that by paying off your debts sooner, the sooner you’ll be able to use the money you were servicing the debt with to invest and work for itself.

Comes with that the contentment of knowing your money is working for you and that you don’t owe anyone. That’s an incredibly inspiring feeling and will drive you to do more with your time.

The lesson here is simple common sense, but it’s important…

If you can work to delete your debt and charge forward with a clean slate, not only will you be in a much healthier financial position, you’ll be in a much stronger mental position than you ever imagined.

of the founding fathers of the United States of America.

It’s a noble idea…

If not a little militant.

I mean, being able to eat is pretty essential, and if you’re in such a bad way money-wise that you’re going into debt because you can’t afford to eat, then, hey, much more urgent action is required than reading Creating Wealth.

So, we should perhaps tweak Ben Franklin’s quote to read:

“I would rather go to bed without PUDDING than to rise in debt.”

You see, for the record, when I talk about managing debt, I’m talking to those who have got themselves in such a position due to overspending, rather than not being able to spend at all.

Nine times out of ten, I think if we’re honest, we get into debt because we want things immediately that we could otherwise have had later.

As I wrote before on this topic, we’re extraordinarily good at rationalising decisions that aren’t always good for us.

It seems great to have that ‘thing’ now — be it a holiday, a car, a newly decorated kitchen — but the immediate enjoyment of the thing will soon be outweighed by the lingering implications of the debt you took on to have it.

The problem with debt isn’t just that you’re in the red and a percentage of your income is being used to service the debt…

There’s the whole psychological worry of having the debt on your shoulder.

And you should never underestimate that psychological influence.

Though it’s easy to dismiss psychology as a bit wishy-washy, the fact of the matter is that any extra worry on your mind will limit your ability to innovate in another area.

You work hard to make the money you do — why let debt eat away at it and trouble your mind?

Indeed, stress and distraction are two of the biggest obstacles you face when it comes to achieving more in life and managing unwieldy debt can lead to both.

I speak from experience. I’ve been in bad debt and I’ve felt first-hand how depressing it can be. I did my best to try and pretend it didn’t exist, that it was OK, so long as I paid a bit off each month, I didn’t need to think about it.

But in pretending it didn’t exist, I wasn’t admitting what the debt really meant…

You see, even though you might feel as though you’re perfectly capable of managing the debt and servicing it each month, the fact is that by doing so, you’re stunting your ability to actually make more money in the long run.

It is such a waste of effort to develop extra income streams and see your income grow but not pay off outstanding debt. Because when you net out the whole thing over time, you’re down.

If you can use the extra money you make from extra income streams to quickly pay off any credit card debts or personal loans as quickly as possible, rather than using your money to service a debt, you can use the money to invest actively and get your money working for you.

Let’s say you make an extra £50 this week, from one of the ideas in 57 Wealth Hacks, that’s great.

Your first inclination will be to spend that as a treat or reinvest it in another income generating project. And if you’ve no debt, then great — do that (preferably the second option).

But if you’re also paying £50 a month to service debt, then you should put that money directly towards paying off the debt. That way the debt itself will reduce and so should your repayments.

It’ll feel like you’ve just thrown away the money you made, because you’ve got no immediate and tangible thing in return. You need to get over that. You need to realise that by paying off your debts sooner, the sooner you’ll be able to use the money you were servicing the debt with to invest and work for itself.

Comes with that the contentment of knowing your money is working for you and that you don’t owe anyone. That’s an incredibly inspiring feeling and will drive you to do more with your time.

The lesson here is simple common sense, but it’s important…

If you can work to delete your debt and charge forward with a clean slate, not only will you be in a much healthier financial position, you’ll be in a much stronger mental position than you ever imagined.

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