A person’s life revolves around debt. There are several examples where we see individual or company is growing at a good pace, earning is growing so does the spending. Many a time net result is NIL or Negative. Debt can be good if you are investing that money for a higher return than borrowed one but if you are taking it for day-to-day needs/luxuries then it’s not good at all. If second is the case then there are good chances that you are in a debt trap like one EMI is getting over, another starts.
Reasons for Debt/Debt Cycle/Bad Finance
- If Buying Insurance policies for investment purpose (95 out of 100 people buy like that only). For insurance purpose, term plan can be the better choice.
- Use of Credit Card and then missing payment due date (Extreme high-interest rate applied if you didn’t pay the full amount on Due date. Even minimum payment option doesn’t work well)
- We are not having any idea of the power of compounding on our investment & we avoid investment in our early life. Albert Einstein said that the power of compounding is the eighth wonder of the world.
- Buying stocks based on tips without any knowledge and then losing money.
- Buying things just because they are on discount & the funny thing is now you will find such discounted sales every other month
- Getting tempted to go for a foreign trip just because some of your friend/relative/colleagues put a post on Facebook and Instagram
- Spending a bomb on weekend parties (5 days’ work & 2 days’ party: This is a new culture)
- No track of cash flow (time & again every month end same situation)
- No emergency budget (No Udhari Fund)
- Spending all the hard-earned money on children marriage
- No medical insurance, a hefty amount gone if one medical emergency comes up in the family.
- No financial plan, People do not know why they need to save money because they don’t know their financial goals.
- Buying excessive gold only to keep it in the locker and many a time putting this gold to take a loan and paying interest on that borrowed amount.
- An extremely conservative approach with investment, all the negative news/updates will be checked for that investment and finally, investment ideas go for a toss! Procrastinating investment decisions (from tomorrow).
- Lack of clarity between asset and liability (e.g. Car can be an asset if you are buying it for Cash or on very minimum finance, but buying a car on maximum finance then this is going to be a liability.
- A lot of people confuse economic spending with being cheap.
- Spending a lot of money on fancy stuff / Gadgets.
- Lack of patience to return from investment, each of wants to see the quick return.
- Depending upon others for investment decisions (Lack of self-knowledge on the subject)
- Not discussing the money matters in the family, keeping children away. This type of decision brings a similar situation in front of each generation as there is no learning transferred to the next generation.
- People blindly invest their money in penny stocks, day trading, futures, and options.
- Wasting time on unproductive things & no time to increase their knowledge on investment skills.
- Instead of spending what is left after investing, people invest what is left after spending.
- Root Cause: Lack of knowledge about personal financial management!!
- Personal finance is 80 percent behavior and only 20 percent head knowledge.
- Most of us know what to do; we just have trouble doing it. How do you lose weight? By regular work-out and keeping diet discipline. But in spite of knowing this fact how many follow this discipline!
- The Great Depression permanently changed the way many people handled their money.
- In our case, that would be borrowing lots of money and not saving any because “my job is stable. I can afford the ‘easy payments’ with my job.”
- The enemy of “the best” is not “the worst.” The enemy of “the best” is “just fine.” Almost similar pattern we follow on our investments.
- It is human nature to want it and want it now; it is also a sign of immaturity. Being willing to delay pleasure for a greater result is a sign of maturity.
- The Red-Faced Kid (“I want it, and I want it now!”) rules your life, you will stay broke!
- We buy things we don’t need with money we don’t have in order to impress people we don’t like.
- We don’t ask “How much?” to pay with cash/Debit card and instead ask, “How much down, and how much a month?”
- The vast majority of college seniors have credit card debt before they even have a job!
Way Head Thoughts!
- Larry Burkett said debt is not the problem; it is the symptom.
- The borrower truly is a slave to the lender.
- Your income is your greatest wealth-building tool, not debt.
- Most people concentrate on the urgent in our culture. We worry about our health and focus on our money only after they’re gone.
- “A budget is people telling their money where to go instead of wondering where it went.”
- No one is born with the knowledge of how to handle money.
- With Money, ignorance doesn’t mean foolish; it means you have to learn how to manage it.
- “What you don’t know won’t hurt you” is a really a foolish statement. What you don’t know about money will make you broke and keep you broke.
- Remember, if you want to be thin and muscular, you should study the habits of people who are thin and muscular. If you want to be rich, you should study the habits and value systems of the rich.
- We’ve car payments and credit-card payments—there’s never been a time when we were debt-free. We avoid discussing money because it would always end with an argument or someone’s feelings getting hurt.
- Continuing to do the same thing over and over again and expecting a different result is the definition of insanity.
- Money won’t behave unless you tame it.
- “Money is an excellent slave and a horrible master.”
- Brian Tracy, the motivational speaker, says, “What does it take to succeed on a big scale? A tremendous God-given talent? Inherited wealth? A decade of postgraduate education? Connections? Fortunately for most of us, what it takes is something very simple and accessible: clear, written goals.” According to Brian Tracy, a study of Harvard graduates found that after two years, the 3 percent who had written goals achieved more financially than the other 97 percent combined!
- We have learned that getting a hold of your attitude is the number one factor in being victorious over your finances.
- Student loans are cancer. Once you have them, you can’t get rid of them. They are like an unwelcome relative who comes to stay for a “few days” and is still in the guest room ten years later.
- It’s unbelievable the feeling of freedom that comes when you don’t have the weight of payments hanging over your head.
- The bottom line is that it is easy to become wealthy if you don’t have any payments.
- If you really believe that wealth building will no longer be a dream but a reality if you have no payments, you should be willing to do bizarre and sacrificial things to have no payments. Time to pay off the DEBT!
- The sexes do view the emergency budget (No Udhari Fund) differently. In general, men are more task-oriented, and ladies are more security-based.
- When your money makes more than you do, you are officially wealthy. When you can comfortably live on your investment income, you are financially secure. Money is a hard worker, harder than you. It never gets sick, never gets pregnant, and is never disabled. Money works twenty-four hours a day, seven days a week.
- Only the strong can help the weak, and that is true of money too. A toddler is not allowed to carry a newborn; only adults who have the muscular strength to ensure safety should carry babies. If you want to help someone, many times you can’t do so without money.
:Short Story:
“Eric Butterworth tells of an interesting system used to capture monkeys in the jungle. The captors use heavy glass bottles with long necks. Into each bottle they deposit some sweet-smelling nuts. The aroma of the nuts attracts a monkey to the bottle.
When the monkey puts its hand into the bottle to get the nuts, the neck of the bottle is too small for its fist to come back out. The monkey can’t take his hand out of the bottle without dropping the nuts, which he is unwilling to do.
The bottles are too heavy to carry away, so the monkey becomes trapped by nothing more than greed. We may smile at these foolish monkeys, but how many times has our freedom been taken away by nothing more than our greed?”
The Wealth Code: Volume 1 is a personal development and financial education book written by Vinod Singh. It is designed to empower readers by teaching them principles of wealth creation, financial freedom, and personal growth. The book offers practical strategies to achieve financial success, with a vision to uplift and transform the lives of millions by promoting financial literacy and entrepreneurial thinking. Singh’s approach is rooted in inspiring individuals to take control of their financial destinies while cultivating a mindset focused on long-term success and abundance.
