A few weeks back, I talked about how I was like my new cell phone – cheaper but I know more stuff. Since then, I’ve been pondering… what “more stuff” do I actually know since starting this debt elimination journey?
Things are likely to be more expensive if you pay for them in the future
This seems obvious but honestly, I never really thought much about the connection between stuff I bought and the payments I was making to the credit card. I don’t mean that I didn’t know that I was still paying for stuff I already had (and sometimes was long done with) with each credit card payment, but they were sort of divorced in my head. So I didn’t really think about that I was basically paying in the future for what I had today. I have been very conscious now of linking the fact I am paying on my credit card still to what might I have bought so long ago with it. Which leads to…
Don’t count on tomorrow to pay for today
If you buy things thinking “Oh I can just put it on the card and pay for it later” without having that “later” money already saved up and available… you might not be able to after all. Something else might come up, or something might happen to your income, the unexpected should be expected. Counting on money you are getting tomorrow to pay for something today is a dangerous game. I have a plan now to get out of debt, but I also know every day of that plan I’m walking a sort of tightrope, hoping I get tomorrow’s money to finish paying off not even today but yesterday.
Interest rates are important
Pay attention to interest rates! Make sure yours are competitive for whatever you are doing. Not all interest rates are created equal, and it is obvious but lower is better. I honestly didn’t really think too hard about interest rates when it came to my student loan, I just assumed I would get whatever was good. I was dumb. I know it now. I am dumb no more. (Hopefully).
Live for today, save for tomorrow
It is important to have a comfortable and happy life… now *and* later. Don’t live within your means (barely) now and have nothing to show for it later. No one gives out loans for retirement (or at least, not ones anyone would realistically want). I’m still working on finding what that balance is, but at least now I know there should be a balance.
A penny not spent is a penny earned
Sometimes it seems saving money might be impossible, so instead look at just not spending money. It kind of washes out to be similar things, but sometimes the best thing you can do to improve your financial situation is just not spend money whenever possible. I used to spend “extra” money when we had it or I felt like we had it. Now I don’t change my spending habits just because we have a little more money in a month. I just have more money left over to pay down debt with (and someday, to save).
Minimum payments are not your friend
Seriously. You could pay for $1000 for like 20 years if you just pay the minimum. the best answer is to not carry a balance at all but sometimes, that ship has already sailed and we just have to minimize the fallout. Pay as much as you can above the minimums, even a few dollars a month can make a big difference over time.
Knowledge is power
This is for me the most important. For a long time I thought it was better to have my head in the sand and not know the real details. But knowledge is power — with knowledge you can institute change. That’s why I made this my one money advice when asked. Knowledge is power. Ignorance will not help you. Know how much you owe, who you owe, interest rates, how much you’ve saved, where you save, fees, everything related to your money. You’ll be glad you do.
So, like my new cell phone, it turns out I know a few more things now than last year’s model did. Most likely, many people already know these things and have known them all their lives. What can I say, I’ve got a steep learning curve. But I am learning.