Recently, my daughter and her husband undertook a complete – and expensive – renovation of their kitchen. It was a long project – and with a toddler running around, the inconvenience of living without a kitchen was – well – a bit trying.
What made it worse was that because of Covid – the high-end refrigerator they had selected was on back order. They had to wait a whopping 4 months – living out of a dorm-fridge in the meantime.
Well – yesterday it finally arrived. But – surprise – the cavity the contractor built into the cabinetry was too low for the fridge to slide into position. Oops. So their saga continues.
There are two ways for them to solve the problem. They can take the feet of the refrigerator and get the one-inch they need for it to slide in – or they can have the contractor cut an inch off the upper cabinet and achieve the same outcome.
Their story reminded me that when we find ourselves in a position of financial stress – too much month and not enough money – we too have two possible solutions. We can either raise the numerator by finding a way to take on a side hustle and earn extra money to create some financial breathing room – or we can focus on the denominator by lowering our monthly expenses and get to the same destination.
Either will work.
Both are painful.
But what if there were a less painful way – or even a painless way – to achieve the same outcome?
If those monthly expenses include debt, there may be just such a way. You see, the interesting thing about debt – from a financial point of view at least – is that we are not locked into a fixed cost – just a fixed rate of interest. And that fixed rate of interest applies only to the amount of time we use the lender’s money.
If we can accelerate the repayment of that debt, the interest clock stops – we free up the associated payment – and achieve the financial relief our budget (and often our relationships) so desperately need. But how can we do that if our numerator (income) is fixed?
The answer is by employing a strategy that focuses on small debts first, then applies freed up payments to larger debts as the smaller ones are paid off. It’s not an overnight cure – but it works – and it works brilliantly. It’s exactly we do for our clients. And the results are rather fantastic.
There are actually three benefits to an accelerated debt-repayment strategy – and those who really get after their debt with strategic purpose, capture all three.
- Time – debt-freedom timelines are compressed – often to half or less than it would take just paying the lender’s minimum payments. The emotional relief of being able to see light at the end of the tunnel is liberating.
- Interest Savings – by paying debts off sooner, the interest clock stops – and you keep that money rather than sending if off to your creditors.
- Income Recovery – early payoff means you’ll get a big pay raise by shedding all those payments – and you’ll get it sooner. That stack of cash that – when added to the interest savings – makes a real difference in the financial lives of those who take this option.
If you have a debt problem – of if debt isn’t really a problem – but you’d like to get it out of your life anyway – just remember, there are solutions out there – solutions that don’t have to be sacrificial or painful. Search for the right solution for you – and attack it with a vengeance.
You don’t need tools or a carpenter – just your own resolve and a bit of knowledge. If a little help – would help – let us know.
