Your goal may not be riches, but how nice would it be to enjoy freedom without financial stress?
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I have been terrible with money most of my life. I was kicked out of my home at 17, so I never learned about money growing up. After struggling through survival mode for years, I was able to land a job working for Pepsi Cola. They trained me how to drive a truck and helped me get my C.D.L.
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At first, I paid off my credit card balances each month.
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I was 18 years old and making $55,000 a year, I thought I was rich. The money would come in, and it would quickly go right back out. To make matters worse, I started getting credit card offers. I signed up with everyone that would give me credit—even the department store cards.
At first, I paid off my credit card balances each month. I felt responsible, and the companies raised my limits. You can guess what happened, right? We had several unexpected emergencies, and I didn’t have the money to pay off the balances. Before my wife and I knew it, we were paying thousands of dollars in payments that did nothing more than cover the crazy interest charges.
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In 2011, after 12 years of making every financial mistake you can think of, we were $180,000 in debt. Believe it or not, we were able to pay off all of our debt, save money, and invest in the markets. We got financial freedom when we stopped believing these six myths about money.
1. “Debt can build wealth.”
Doesn’t it seem dumb that to build credit you first have to go into debt? Debt can be a tool if you’re a millionaire or a large billion-dollar corporation because the interest on the debt is tax-deductible. The wealthy are always looking for deductions. For the average person, however, debt can crush us. We start off with the intention paying off our balances and paying on loans, but life happens.
Your water heater breaks, your car has problems, or you injury yourself. Unplanned life situations affect your ability to pay the debt back, and the interest makes that debt continue to grow. Look at what’s happening with student loans. It’s estimated that it will take the average student 25 years to pay off their loans. Debt is not the path to wealth. Billionaire investor Warren Buffet said, “Those who understand interest earn it, those who don’t, pay it.”
2. “I have time on my side.”
When you’re young, you think you can make mistakes and have plenty of time to make them up–especially financially. You think you can make more money or overcome poor choices. The problem is that none of us knows how long we’ll live. We aren’t guaranteed more time.
Time-related to money works in reverse. The sooner you start saving and investing; the better compound interest can work and grow what you have. The time to start handling your finances properly is right now.
3. “Investing is for rich people.”
This is one of the most commonly spouted myths and one of the most destructive. If you wait until you’re “rich” to invest, you could be waiting forever. The reality is that with today’s access to information and technology, anyone can figure out how to invest. You can research anything related to investing and feel confident you know at least the basics.
You can read Tony Robbins book, Money: Mastering the Game for an in-depth and practical look on money and investing. You will start as a novice and walk away with a clear understanding. Remember what I said about time. The sooner you start, the better compound interest will work for you.
4. “I can’t afford to save.”
I’m not going to give you a cheesy line. I will tell you that if you looked carefully at what you spend money on, you would find a few dollars that you can save. If you cut out things such as cable or fast food, you can save a little. A little bit over time adds up, and I’m not saying you have to give that stuff up forever. You’re making a short term sacrifice for a long term gain.
5. “Money isn’t important.”
Money isn’t the only thing in life and not the most important, but it IS important to almost everything you want to do. You will need money to chase dreams, you will need money to survive, and you will need enough money to not let it stress you out. Money stress is one of the main life stressors. Don’t chase it, but make enough to give you some breathing room and freedom.
6. “It’s too late for me.”
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Take some time to think about your financial goals.
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I got my finances in order at 32 years old, later than I wanted, but I’m grateful that I started. It’s never too late to get control of your money. It’s never too late to figure out the right investments for your age. Don’t believe the myth that it’s too late, because that myth will keep you stuck.
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Money doesn’t have to be a headache or an area of your life that you try to avoid. You can get control and thrive. Today, we are debt-free. We save and invest. Every day we see our money growing. We see a legacy that we will be living for our children. We see the security we missed all these years past.
Take some time to think about your financial goals. Talk them over with your spouse/partner or family/friends. Strive for freedom. You don’t have to be rich, but having freedom in your finances is a beautiful thing.
How are you doing with money?
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Photo: Flickr/ Daniel Chang
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