So, today I have to be completely honest, ‘cause I’m just in that kind of mood. Those hot new kicks you pulled out your shiny, new credit card to pay for? Or the new whip you just got on lease for the dealership special, or the hot lipstick colors and eyeshadow palette you put on your store account? All of it’s incredibly fly. But check this: you don’t really own it. And your student loans are coming for you. I got something else for you, too. Your crib– the one with the mortgage you put 5% down to purchase? It really belongs to the bank (read: it’s not yours) and they’re just letting you live there until you have a bad month, or suddenly become unwilling to pay multiple times the purchase price to reside in the home.
At this point, you should be seeing a huge, neon EMERGENCY sign over your financial circumstance.
You know what? Because you need to live somewhere and things like “bad months” are but a natural disaster, health emergency or USPS hiccup away, that makes your debt your emergency. What happens in the event of a sudden medical or family emergency that eats up your emergency fund, and you no longer have the cushion required? Suddenly, you’re living paycheck to paycheck with additional bills on your back and you’re picking and choosing between lights, food, and medical bills.
EMERGENCY, Yo– you see the sign yet?
I mean, naturally, people kind of say, at this point you do what you have to do. You beg, borrow, hustle to make ends meet and you ensure the fam is taken care of. At the end of the day, though, you shouldn’t have to take care of business this way. So why not set yourself up for success by thinking in advance? Create enough of a cushion so that you don’t have to worry about this kind of thing happening, and frankly, avoid debt in the first place. Seriously, take it back to the basics.
Fact is, if you don’t have it, you can’t afford it.
I mean, if you can’t pull out the cash to pay for whatever it is– a roof, a car, an addition on your house– you can’t afford it. Period. I know, this takes it back to days before the Great Depression– like back when mayo and credit weren’t quite a thing. But let’s break it down: by eliminating the creditor, you’ve started to shift your own mindset and regained control of your life. You may not always have the flexibility you enjoy– you cannot always take the trip you’d like, but once you’ve intensely attacked and successfully eliminated your debt, you will be able to live as you want to, save as you want to, and give to the causes that are important to you.
You actually own what’s yours.
You own your home. You won’t find your home printed in the newspaper’s pre-foreclosure section while riding home from work on the train like I did. Your bank cannot come to you 25 years into a 30-year mortgage and say “We are sorry you’ve got cancer, but we need you to pack up in the next 48 hours and get out.” You don’t have to worry about making monthly payments. At all. Of any kind.
You own your education. You don’t have to worry about owing someone an 8% interest loan you can’t discharge over the next 30 years to pay for a degree (or several degrees). You don’t have to worry about the payments for that education that you received interrupting your daily living– shifting your regular budget for things like food and travel. Finally, you don’t have to worry about the government siphoning off portions of your paycheck before you receive it to account for payment for your education.
You own your car. You won’t exit a building one day– won’t come out of work one day, or exit a friend’s house– to find your car missing from where you left it because your spouse neglected to make payments, or because you had to fill the crying bellies of your babies. You won’t have to make the choice to hand the keys back when the payments become heavier than they ever seemed.
You own your savings. There is no ruling that will allow a creditor to lay claim to your savings. Why let your money work for someone else? When you decide to stop letting other people reap the benefits of your hard work and own your own success– put it into an account with your name on it instead of a creditor– you’ll begin to see your own wealth multiply, and with it, benefit from your hard work. You can plan to do with that wealth what you choose– enjoy the pleasures of life while you have plenty of runway ahead of you (read: retire early), or to give generously to the next generation of your family. You can, with that wealth, give generously to causes that you believe in, or better, simply, change the way you give and spend your time. The key is, first, to focus, pay your debts, then feel each and every one of the rewards.
Do you see your neon sign? How do you imagine you’d benefit from addressing your emergency?
Further Reading: One man’s one-year journey out of $100k of student loan debt, which he achieved by identifying the emergency and inflaming his hustle. Read on here