Sometimes it’s hard to get ahead. Sometimes your financial goals take forever to accomplish. Staying the course is a challenge. You know you need to build some kind of wealth, but time goes by and you still haven’t made a plan.
The problem is that you think there’s always tomorrow. The reality is that tomorrow always brings something new for you to deal with and that something usually takes money.
The biggest problem with all of this is time. Before you know it, you start wondering why your finances aren’t where they should be and you need to do something about it to ensure a future.
These are three things that hold you back and ultimately destroy your wealth as time goes on.
Credit Card Debt
You can’t beat 20% interest. Therefore, if you have credit card debt, paying it off provides with an instant return on your money of 20% (or whatever your credit card is costing you). Having credit card debt is an emergency unto itself. It’s priority number on a list of financial goals. There’s just no getting around it. Credit card interest is too high to be of any good to you, so accumulating debt in this fashion is the ultimate destroyer of wealth.
That’s what debt represents. Current payments that need to go to past purchases. Do you even remember what is you purchased? Can you look around your home and see where that money is. I’m willing to bet that most of what you purchased but haven’t paid off is not in use anymore. Clearly
The use of credit cards takes a great deal of responsibility. I don’t mind the use of credit cards. It’s a tool. Competition among credit card companies today is so great, they offer a ton of benefits. Cash back, frequent flyer miles, extended warranties, additional insurance on car rentals are just several of the perks of using credit cards.
But again, it takes responsibility. If you’re still looking at credit cards are “free money”, you’re mind-set needs to change immediately. It’s nothing more than a tool.
If you let it get out of hand, you’re letting through the door the #1 destroyer of stacking dollars and building wealth. It’s easy to get in, but it’s really tough to get out of it. Trust me.
If you have credit card debt you’re struggling to pay off, you are most likely overspending. If you find you are constantly overdrawn on your bank account, you are definitely overspending.
Buying everything in sight is a destroyer of wealth. If you can’t control your expenses, your available cash is eaten up before you had a chance to put it to work for the future. This is what personal finance experts mean by paying yourself first. This is why it’s important to develop and track your budget so you know where your money is going.
By paying yourself first, the money is set aside before you get a chance to spend it on something. Whether it’s $25 or $250, paying yourself builds wealth and keeps your expenses under control. After all, if the money isn’t in your account, you can’t spend it. If you find you can’t meet your bills after paying yourself first, you most likely have too many bills on your plate.
Sign up for your company’s 401k plan. Establish a savings account and have money automatically deposited into this account. If you can’t see it, you can’t spend it.
This one is beyond your control. Because this is so, investing your extra cash is the best way to beat inflation. Sure, inflation has been low the last several years, but nothing lasts forever. I’m sure we’ll see a time when inflation gets out of hand and our government will struggle to contain it.
I have no idea what things will cost 25 years from now. What I am certain of is that it will be more expensive than it is today. That’s how a fiat currency works. It takes more dollars to buy the same goods and services as time goes on. Investing your money on a regular basis helps ensure today’s dollars are equal to or more than tomorrow’s dollars.
Starting early is key. The longer you wait, the more dollars you need to put towards tomorrow. And you will ALWAYS need money for tomorrow. Relying on being employed and help from the government isn’t always set in stone. Things change. You change. What doesn’t change is the need of more dollars’ tomorrow to buy the same things you do today.
The point here is to understand that without being able to put money into investments, you are not stacking dollars, but destroying dollars that belong to your future self. Destroyers of wealth prevent you from doing other things. Having debt means you’re constantly taking today’s money to pay for yesterday. The change in your mind-set is that today’s dollars need to pay for tomorrow.