Difference Between Lowering Debt And Looking for Good Deals
While we’ve been talking a lot about debt and the numerous ways it helps our lives to eliminate it, one of things we do need to understand is it’s a different purpose to eliminate debt and to look for great deals at low prices.
Some may think this is obvious, but I’m talking about doing things for the purpose of releasing money in order to build up wealth. Paying down debt, while important, and it can indeed help you set aside more money for wealth building once you lower it though a number of strategies, like transferring debt from a high interest credit card to a low interest card. That’s an immediate release of funds. The problem is, most people really addicted to debt need to focus on paying down that debt before they think in terms of trying to build up their wealth.
Having said that, I do think it’s good to take symbolic steps which can help you psychologically and at least put a little bit of money away, even if you have a heavy debt load. But overall, when you cut back on debt load and expenditures, it’s best to take that savings and tackle your debt before anything else.
Now the reason I lump this together with finding good deals, is many people are looking to cut back on monthly expenses for the purpose of putting away money for themselves.
This is a different purpose and a different practice, and you can see the results instantaneously as you take money saved and apply it toward building a financial moat and preparing for your retirement.
I mention this because I’ve communicated with people that sometimes confuse these two purposes of deal with our financial circumstances, when they are completely different issues, mentalities and financial challenges to work through.
When it comes down to it, lowering and paying off debt is to get you out of bondage to the lender, while looking for and getting good deals is for the purposes of lowering monthly expenses, building up financial protection and putting away for the future.
With one you’re releasing funds to deal with the past, and with the other you’re putting away funds to prepare for your future.
Debt is dealing with major financial surgery, and must be approached that way, while looking for deals is saving money through a thousand cuts. Each has its place, but we need to be sure not to confuse them, as they are completely different financial issues we’re dealing with, and it’s essential to understand one from the other when working through the financial morass we call life.
Tags: debt, money management, save money, saving strategies
