Mary King's Blog

Paying for Your Past

Last month I was invited to be a guest panelist for a survey, conducted by Schick in conjunction with Galaxy Research, of 1252 women aged between 18 to 39 years from all over Australia. 74% of the women surveyed said they felt financially independent. My thoughts about that are that they may feel independent because they are earning a wage. If they stop working in the job and the wage ceases they would no longer feel financially independent. In my opinion there is a vast difference between feeling financially independent and being financially free. Financial freedom comes when our investments - (money working for us - rather than us working for money) exceeds our expenses.

80% of those surveyed said they had some form of debt and 48% of that debt is credit card debt. I was asked if I was surprised at the level of credit card debt. My feeling was not of being surprised necessarily, it was more that I felt concerned. Of those surveyed, the average credit card debt, carried over each month, is $2,500. Credit card debt is consumer debt and is a costly way to spend your money. if only the minimum payment is made to the lender each month it could take 15 to 20 years to pay off the balance. That is excessive money to expend for a short-lived pleasure. I believe when we have consumer debt that we continue to pay for on our credit card, that we are paying for our 'past'. Would it not be a better idea to save some money for our 'future' and when we have saved the money give ourselves a 'reward'? It certainly costs less to save the money first.

Maybe we feel a sense of power when we can buy something now and pay for it later. This feeling of power is not real power and can not be sustained.

I truly encourage each of us to eliminate our continuous credit card debt. While paying the minimum may not seem like a lot of money to pay out each month the banks are receiving very good interest for the money they lent you. I suggest you make a concerted effort to pay at least an extra 10% of the minimum payment due each month until the card is paid off. If you have several cards add up the minimums, add 10%, and pay that amount off the card with the lowest balance, while still paying the minimum on each card. Once you have paid off the card with the smallest balance, write to the bank and close the account. Make sure you cut up the card so you are not tempted to use it. Next, roll over the money you used to pay off the first card to the card with the next lowest balance, and repeat the cycle until all cards are paid off. Once you're back in control, by saving the interest you used to be paying, you can now start to think about saving your money for investing and thus gro! wing your wealth.

How can you live more simply? Simplification is a very important aspect to increasing your net-worth. When we live within our means we are coming from a position of power. When we live beyond our means we are giving our power away and draining our energy. Ask yourself how you can simplify your desires? At first it may feel like a sacrifice to think of alternatives to something you would like to have right now. As you start to think of less expensive options I feel sure you will begin to see benefits. Why not give it a go and find out for yourself?

posted by Mary King   # 1:48 PM   0 Comments → add comments