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The Danger Of Rounding Up Your Debts
By: Stuart Laing
Rounding up your debts is one of the biggest dangers to your financial position.
It's also one of the easiest ways for your debts to get out of control.
This way of thinking is best summed up by the following comment; ‘I already owe
$27500 so what’s another $500. It takes my debt to a nice round figure $28000’.
That’s a dangerous way to think. From bitter personal experience, I know what
it’s like. You try to limit your debt to a certain amount, such as perhaps
$10000. But that limit comes and goes. Your debt creeps up above that amount.
But you’re enjoying yourself, so you carry on spending.
You reach $13500, but you don’t want to stop, so you readjust your ‘limit’,
thinking ‘I’ll go up to $20000, but I’m not going a penny higher’.
So you carry on spending and your debts hit the $20000 barrier…and then go
slightly beyond.
Then what happens?
Correct! You increase your self-imposed limit to the next psychological barrier.
Perhaps $22000 this time! And then you carry on spending.
Eventually, after many more ‘final’ limits have come and gone, your debt stands
at $27500. And then you see a rather nice 7 day package holiday advertised as a
’special, once in a lifetime, never to be repeated’ offer. $500 first come,
first served!
Your reasoning goes something like this. ‘That’s a great offer. I’ve not had a
holiday for two years, and I could do with some sun before the winter sets in.
I’ve already borrowed quite a lot. But it’s a special offer, and I couldn’t
normally afford that type of holiday. I know it’s kind of expensive, but I
already owe $27500, so what’s another $500. It hardly makes a difference. And
I’ll worry about paying it back when I get home.’
You’ve reached another of your preset limits. But is doesn’t stop there, oh no.
After all, what about a new wardrobe of clothes to take on holiday! And you
couldn’t possibly go away without some spending money. You just wouldn’t enjoy
yourself otherwise.
And so the $28000 mark is broken. Next stop $30000, or will it be $35000?
But as I said earlier, every extra dollar that you borrow restricts your freedom
even further. Every dollar that you owe will cost perhaps $2 to repay after
interest. It could take you half an hour (after tax) to earn that amount.
$1 borrowed, half an hour of your precious, non-renewable life. Gone! Never to
be replaced! Wasted!
Now half an hour may not seem like much. But what if it’s multiplied by five
hundred?
That’s 250 hours of your life. That’s almost six full working weeks!
And once your debt reaches $28000, what is there to stop you from thinking ‘it’s
only another $2000. It will take my debts to a nice round $30000’ when you see a
leather sofa/laptop/hi-fi that attracts your attention?
Bang goes another 1000 hours of your life. That’s another six months of eight
hour shifts to look forward to!
When will it end? When your life runs out of time or the bank manager says ‘no
more’?
Round figures aren’t nice! Especially when it means that your debts are even
bigger than before. When you owe money, every penny counts! I can’t stress how
important this is!
This rounding up attitude is very subtle, that’s why it’s so dangerous. It draws
you in. And the more you owe, the larger these ‘what’s another [insert sum of
money]’ thoughts become. If you owe $9200, what’s another $800. That takes you
to $10000. But if you already owe $92000, this ‘what’s another’ attitude could
cost you $8000. That will take you up to a nice round $100000.
Don’t mentally round up the amount of your borrowing, in order to justify
spending even more. Every dollar you owe = less freedom.
About the Author:
Stuart runs a website dedicated to helping people get out of debt. So if you
want to improve your financial position, visit http://www.icanhelpyougetoutofdebt.com for free, impartial information on how to eliminate your debts.
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