It is critically important that you understand the two overarching concepts within the Security Elements series. For this reason, I will depart from the use of elaborate metaphors and frivolous wordplay (if only for a moment).
The first is to avoid consumer debt in the form of credit cards and loans. Except in the case of purchasing a modest home and fulfilling transportation requirements, receiving a loan has diminishing returns and possesses no possibility of return on investment.
Regardless of whether you now possess some debt, you will inevitably require a loan for one of the two reasons mentioned above.
Prioritize and Execute
Debt should be addressed like any other enemy target requiring elimination. However, different targets require different tactics. A machine gun nest on a hill will be impervious to an infantry advance.
Change up tactics when necessary. Is the enemy’s position too heavily fortified?
Do not stay in a bad situation. Implement a new strategy.
– The Warpath
A lot of financial gurus will tell you to start paying off one debt or another.
The first priority is to begin living a strict, written budget and eliminate as many sources of present debt as possible. Once you are actually spending less than you are making, you can begin prioritizing one debt or another (i.e. highest/lowest interest rate, longest/shortest term, etc.)
Denying the Enemy Resources
What is the last bill you paid? A phone bill? Utilities? Car payment?
What was the first bill you paid after you received your last paycheck?
Was it to that creditor who has been nagging you?
Perhaps you are more diligent, and you paid off the balance on your credit card.
But answer me this: when do you pay yourself?
Why ensure the service provider receives their due before making a payment to your own savings account?
Let them wait. Prioritize yet again and pay yourself first every time you receive your paycheck – this will build a robust savings account over time. Determine how much you are capable of contributing to an emergency fund and then pay those you owe with what is left over.
This is not the common approach to saving. Most people pay everyone else first and then have nothing left to save, or save only a fraction of what they are actually capable of saving.
Again, math is not the problem. I know you have only so much money coming into the bank account each month. But the problem is your behavior i.e. what you are doing with the money while it stays in your bank account.
Prioritize and Execute by paying yourself first, meanwhile Deny the Enemy Resources by letting them wait until after you have paid in to your future.
This is the key to creating a bright future for yourself and your family.