 |
Personal Wealth: Can You Build Wealth While You're Still in Credit Card Debt?Your personal wealth is at risk whenever you have bad debt, and credit card debt is exactly that most of the time. Most personal finance advisors urge that before you even move on to savings of any kind, you should eliminate credit card debt or risk your personal wealth. The reality is: how can you get rich when so much of your money is going to pay rates of interest that typically range anywhere from 9.99% to 18.99% and even 28%? It’s extremely difficult, if not impossible and that is why the experts advise unloading the debt as quickly as possible and of course, that’s sound judgment, in our opinion. Even Suze Ormond, one of our absolute favorite personal wealth experts, often advises first getting rid of debt before starting savings. Considering how much you end up paying in interest, it’s sound advice but it didn’t totally work for us. Of the financial experts that we liked, only David Bach advocated saving money while pay down debt. And that’s what worked for us.
For most people, personal wealth comes from having good habits. Even if money is inherited (since that accounts for a huge amount of wealth in most countries), this still applies. Those who become rich, usually do so from having good habits. This means that human behavior is a really important part of becoming rich. As human beings, we are more than numbers on a page.
Although in theory, it makes more sense to tackle credit card debt before saving, it didn’t work for us. Our personal finances seemed to be getting worse, not better. For anyone who has their personal finances in a mess, it can be extremely demoralizing, but there are solutions.
What did work was when we began to pay ourselves first by putting a little bit of money into our savings account, even when we still had debt. We didn’t save a lot. Most of the time, we saved a smaller percentage than 10% from each paycheck. Sometimes, it was as little as $20.00.
At first, the savings grew very, very slowly. And at the time, what we were doing seemed liked poor judgment. We wondered ourselves if we were doing the right thing. It’s no secret that mathematically, it didn’t make sense because the interest on our debt was much, much higher than anything we were getting on our savings accounts.
But it began to work! And it continued to work. Our personal wealth really improved and we were able to recover from that debt when it had seemed hopeless even a year before.
So why did saving even a small amount from each paycheck work well for us?
1. We began to feel more empowered. It’s amazing how saving even some money will help you feel more in control. 2. We are driven by rewards. Paying ourselves first, even if it’s a small amount, still rewards us. 3. If all we do is focus on lack, we tend to get demoralized and by focusing on what we don’t have, we magnify it, and create more of it. 4. On some level, we sent out a message to the universe that we were ready for wealth. We made room for savings because we had an account that was active. 5. We created the habit of saving. This simple act is a very important one. 6. The banking experience became more positive. And we began to feel good about money and that’s really important because we began to improve our relationship with money. 7. Should any unexpected expense come up, you can actually use your savings as a way to pay for it. You don’t have to go further into debt. It’s quite liberating, especially when you are in debt. It really worked for us. Why not try it too?
Start handling your credit card debt in a more effective way by using our FREE .pdf template.
|
