Financial Advisor | Austin, TX | The Art of Finance | Budgeting like a Boss – #2 – Debt Payoff
The Art of Finance is a fee-based financial planning firm dedicated to helping creative minds negotiate the complexities of personal finance.
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Budgeting like a Boss – #2 – Debt Payoff

06 Mar Budgeting like a Boss – #2 – Debt Payoff

OK guys, time to buckle up… 

 

On our regular budget blueprint, we always put debt directly below essentials.  Making it stop #2 for our dollars. Why? Because you need to get debt out of your life. 

 

But debt allows us to realize our dreams faster, visit far-flung locations, and shuttle our families around in safe and reliable cars, right? At least that’s what all those high-budget ads would have you believe. Unfortunately, it’s just not the full picture. We’ve been conditioned to believe that credit cards and auto loans are just a natural part of everyday life. But don’t fool yourself into thinking a credit card company cares about your dream vacation. They’re in the money-making business. And they ARE smarter than you. They know the easier they make using their product, the more likely you are to use it at the exact moment you shouldn’t. As anyone with a load of credit card debt will tell you, this is the opposite of freedom. 

 

Through debt, we get things now and pay for them later. This preys upon one of our deepest human weaknesses; always wanting to have our cake AND to eat it too. And with credit cards and student loans and car loans, you can get pretty full. For a while at least…until it’s time to pay the piper.

 

I get it. Putting your hard-earned dollars towards debt is one of the LEAST fun things out there, right alongside paying taxes. But if you’ve ever thought “Dang, giving my hard-earned dollars to someone else every month sucks” then join the dump-debt club, my friends! Transitioning to paying for things with money you have is the best. There are no bills to be afraid of. No collectors to dodge. No futures to sabotage. You are free to do EXACTLY what you wish with every paycheck that you work for; it’s a fabulous feeling.  

 

That’s why we put debt payoff just below rent and groceries and above things like investing into your retirement. Investing while carrying debt is like running a marathon with weights tied to your ankles. For goodness sake, you need to unshackle yourself, and then continue the race. If getting rid of debt gets top billing in your world, it will happen. As Dave Ramsey says “You can wander into debt, but you can’t wander out”.

 

So, then the question becomes, which debts to pay off and how.

 

Well, here’s a video for you dears, where we answer that exact question. : ) 

Next time, we’ll tackle Retirement!