I love when I hear success stories about normal people paying off their Debt. It proves that you don’t need to be a millionaire, a financial genius or even a Johnny Moneyseed to make financial dreams come true. Whether your goal is to simply pay off a credit card or to Retire Early, individual financial successes should always be celebrated.
Recently my friend, Amber W., posted this status update on Facebook:
Today I realized we have paid off 3 credit cards, a loan, a student loan, rolled money over from the last paycheck AND have savings/investments. Not bad for the first half of the year.
Everyone in the world should offer a “Congratulations!” for the kick-ass job her and her family have done with their finances. Wouldn’t you hit the “like” button if you saw a status update like that? I think it’s pretty incredible, personally (she must have been reading a lot of Johnny Moneyseed this year!) After the congratulations are over, we have to start thinking about the future, because now the Debt-monster has been banished, and unfortunately he takes that feeling of being financially-overwhelmed with him. This is the point where most people become complacent and the Debt-monster starts to regain its original strength.
A few years ago I had a boss that would tell people — whenever they were being congratulated for something — to not rest on their laurels. Basically what this phrase means is: You’ve done good things in the past, but you need to continue to focus and do good things in the future. This applies as much to your financial life as it does to your performance at work.
You don’t just pay off a bunch of Debt “accidentally”. If you’re anything like me you would have developed a solid Debt-attack plan and empowered yourself by setting goals to reach Debt-freeness. Whenever you reach a new rung on your financial goal ladder you should treat yourself in some way. What better way to encourage yourself to keep trucking than to know that you’re going to get something good out of it! Remember that you should only treat yourself proportionally to the completed goal (ie, Don’t buy yourself a Ferrari when an ice cream cone would do the trick).
It’s completely understandable why people want to pay off their Debt. Debt forces you to make payments in the present and future for things purchased in the past. Debt forces you to give up some of your paycheck every month, meaning that you don’t get to keep your entire paycheck until you’re Debt-free. But, when we become Debt-free there’s nothing really there to encourage you to save or invest. You don’t have Debt-stress anymore, so what’s the appeal to saving?
Well, it’s obvious that if you have the financial ability and the stick-to-it-iveness to pay off credit cards, student loans, etc, you have the ability to create a solid stockpile of cash to avoid ever going back to dealing with your old, long-forgotten Debt-monster. A stockpile of cash will help you avoid months and months of finance charges, because you’ll have the capital to pay off the bill the day it comes in the mail. Your stockpile will eventually be the money that you live off of. Wouldn’t you rather lose a little bit of your money every month to your investments just to know that you won’t have to work as hard and long as if you didn’t save at all?
My personal recommendation is that whenever you pay off Debt — in any form — continue making that same payment to yourself, whether you put it in a savings account, or in an investment account that can generate some real money (like the ones you can find at Betterment.com). Don’t be easy on yourself either. You do deserve to treat yourself occasionally, but you don’t deserve to not save/invest at all. Unless, of course, you want to be a habitual slave to Debt your entire life. But you don’t want that!
This message can apply to other aspects of your life as well, including Health/Fitness. Say you’re trying to lose a few pounds to get back to your optimal weight, you’re going to work your ass off, diet and do whatever it takes to get where you want to be (where you deserve to be!). Once you’ve reached your goal you wouldn’t quit would you? You might cheat on your diet a little bit, but you’d probably want to maintain your level of fitness, because it’s easier to stay in shape than to get in shape. Finances work the exact same way. Anna pieces these topics together very nicely in this post.
To anyone that has paid off a significant amount of debt, the choice is yours: Rest on your laurels and go back to your old ways of spending; and end up in Debt again. Or, pat yourself on the back, then take the financial high-road and pay yourself; and avoid Debt for the rest of your life. What side of the aisle do you want to be on?