Saving Money: Stop Spending Like An Idiot Part Two

debt

The key point the last article tried to drill into you is to was that you need, need to stop impulse spending.

There is never going to be a time in your life when it’s going to be less important. If you can’t stop yourself from spending $20 on scratch tickets when you’re making $20,000 a year, you’re not going to be able to stop yourself from blowing $1000 when you’re making $100,000 a year.

Know the difference between being ‘Cheap’ and ‘Frugal’?

Calling someone “cheap” is an insult. In the old days, being “frugal” was a compliment. It means you didn’t waste things and made the most out of limited resources.

Ben Franklin was frugal and he’s on the $100 bill.

Don’t fool yourself. It adds up. You won’t remember what you spent the money on in a month. That money will not come back, and you will not be able to make the smart move and put that money to work for you. We’re going to discuss investing soon. But for now, let’s stick to how to keep from losing that cash in the first place.

Today we’re talking about your second biggest enemy. Right after stupid spending is stupid debt.

The most common form of debt by far is credit card debt. Now lets not make it any scarier than it is, credit cards themselves aren’t a bad thing. Credit cards are a tool, just like a knife.

The problem is that – like a knife – not being smart about it means you’re going to get cut.

And the honest truth is, plenty of us just ain’t smart about it.

Credit cards are extremely easy to get, and the credit card companies are making them easier and easier to use. If you haven’t taken control of your impulse spending, credit cards are like taking a bleeding hand and turning it into a bleeding arm.

Payday loan companies are like a bleeding neck. There is a way to be smart about it.

Just about all credit card debt is what is usually called ‘Consumer Debt’. There’s a longer explanation, but basically this means you got into debt because you bought something that will either disappear, or wear out and break after you buy it.

If you pay it back on time, no problem. If you don’t, you’ve taken money you don’t have, to buy something that’s going to disappear, and then you’re going to have to pay up the money plus interest.

The technical term for that is what we call “A Shit Deal”.

If you want a chance in Hell of getting rich and being wealthy, you’ve got to stop using bad debt. Stop spending on your credit card. ONLY make purchases you can afford in cash, and pay down your debt.

Pay it down aggressively.

If you need to, cut the card up (believe me, they’ll be happy to send you a new one when you’re ready). Some people even freeze the card in a block of ice — you’ll be able to get it back, but not quickly. Once you’re out of debt and saving money, it’ll be time to start building some wealth.

 

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