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You may have asked yourself this.
But one of the questions i frequently hear asked by people
concerned about debt is, 'Just *how* can i clear all of my
debts in the shortest time possible?'
I would answer something like the singular most important
thing they could do is to make their income exceed their
outgoings - and that they start doing this right away!
People , i find, although generally accepting the logic
behind this statement, still seem rather unenthused by the
whole deal. I'll usually hear something like, 'but my
debts are so huge. How is an extra few dollars saved here
and there going to help me.'
So, if you're one of those feeling a little demotivated
here's a little exercise. Please try this as i'm sure
you'll find it very revealing...i know i did when i was
first shown it!
Ready? Right...you have a choice. Work for the next 20
days for $2000 a day, or work for the next 20 days at 2
dollars a day, but compounding that amount by double each
day, which would you choose?
First option seems tempting, doesn't it...i mean $40,000 is
hardly chicken feed. But what about option 2. Let's try
it with pencil and paper (or keyboard and monitor!)...
Day 1=$2, Day 2=$4, Day 3=$8, Day 4=$16, Day 5=$32,
Day 6=$64, Day 7=$128, Day 8=$256, Day 9=$512,
Day 10=$1024
Tempted to pull out yet? We're not exactly racing to
financial freedom, are we? However, let's persist a little
further...
Day 11=$2048, Day 12=$4096, Day 13=$8192,
Day 14=$16,384 Day 15=$32, 768, Day 16=$65,536,
Day 17=$131,072, Day 18=$262,144, Day 19=$524,288,
Day 20=$10485,76
Astonishing, isn't it? By sitting tight those extra ten
days, you would be sitting on a cool million.
Does the above example look a little simplistic to you?
Well, let me tell you, it's far from it! This is an
example of what is commonly known as Compound Interest.
It's been a cornerstone principle in the accumulation of
many great fortunes. In fact, many have even labelled it
'The Eighth Wonder of the World' (i believe Einstein was
one of them!).
You see, the world's wealthy learned long ago that by
allowing interest to accumulate upon interest, they could
make money work for them rather than the other way round.
Unfortunately, though, and based on the principle that
nothing in this world is ever really standing still, a
great many of us (and without really being aware of it) have
Compound Interest working against us.
In stark contrast to the example above, if you have credit
card debts of any kind and are only making that minimum
monthly repayment, then you're paying interest on top of
interest and gradually becoming poorer.
Think about it, though, for a second...
When you took on that first credit card or car loan. Just
like in the example above, it didn't really seem a lot at
first, did it? Until one day you maybe noticed the interest
piling up a little higher than normal...
The first, and most important step on the road to financial
freedom is to maximise your solvency i.e. by earning more
than you spend.
I'm sure you've probably heard the old Chinese saying, 'The
Journey of a Thousand miles starts with One Step.' It's
really all about having a little discipline in those early
key stages.
So take heart from the example above. That initial money
saved can multiply at a frightening rate, and a debt-free
lifestyle can become a reality a lot sooner than you think.
Copyright © 2004 by Colin McCaig
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ABOUT THE AUTHOR: Colin Mc Caig is dedicated to helping
others become debt fr~ee and start their own home-based
business. Get his fr~ee 6-part mini-course. Learn the
powerful secrets to becoming debt-fr~ee using only the
money you have today. Send a blank email to:
==========>>>>>>>>>> mailto:colindebtfre@d...
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