Personal finance is learning to budget, spend mindfully, and find a balance between seizing the day and saving for the future.
Debt does require sacrifice. However, there are 2 things that you should never sacrifice: Relationships and Generosity.
#3. Dad, I understand that ‘The three most harmful addictions are heroin, carbohydrates, and a monthly salary?” The first two are easy to understand.
The monthly salary can numb your mind and creativity. Anything fixed in any form is limiting…limiting for the mind, body, and largely for creativity.
#4. Dad, I didn’t know that my credit card payment due date was last week. It cost me $45 in extra interest and a knock on my credit score
I don’t believe the adage “What you don’t know can’t hurt you?” Whoever said that was a complete and total moron.
Most people who overspend their income in one of three ways:
- Too much house.
- Too much car.
- Too much entertainment.
#6. Dad, in your book you discuss the difference between being cheap and being frugal. What is the difference?
Cheap people focus on price first. Frugal people focus on quality. One common denominator they both share is that they control how much money they spend.
Pay yourself first: each paycheck, auto-transfer a set amount to your savings.
It is called fulfillment. You reach this stage when you discover who you are by supporting yourself doing work you love. This is when your time, talents and money are aligned to make an impact on the world.
I suggest tackling smaller balances first. For example, $5,000 at 10% might be a priority over $10,000 at 12% for extra money. Get the small one paid off and then move onto the next. Then you can double up on the 10k and so on. This builds momentum and there are psychological rewards to doing it this way.
From a purely math point of view, it’s almost always better to pay off debts before putting money into savings. There is one exception. Contributing towards and emergency fund.