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If You Suddenly Came into More Than One Million Dollars and Have Exactly 10 Years Left to Live?

If You Suddenly Came into More Than One Million Dollars and Have Exactly 10 Years Left to Live?

“If you suddenly came into $20,000,000 and the same day you found out you have exactly 10 years left to live, how would you begin living your life?”

This is called the “20/10 question” and it’s one of my all-time favorites when working with clients.

Most people say things like “I’d quit my job and go traveling,” or “I would take my family around the world” and one very amusing response “I would buy my own cruise ship.”  Unfortunately for the last girl, we ran the numbers and found that $20 Million was NOT enough for her to enjoy a private cruise ship, though for the next ten years she could cruise almost non-stop and be okay.

What’s odd is what people who find themselves in this situation ACTUALLY do.

When someone gets this kind of money, they are far more likely to KEEP working than QUIT working.  The reason is quite simple: sitting around on vacation all the time is boring.  Very, VERY boring.

Sure, enjoying a drink on the beach for a couple of days is nice, but there’s only so much sun, swimming, and Anne Rice novels you can read.  After a while, you need something to DO.

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The second part of the question “10 years to live” provides a sense of urgency to the equation.  This helps us get rid of safe answers like “I’d invest in real estate/gold/tulips” or “pay off my house and put it away for retirement.”

If we know that our life is short, we choose to live a little more recklessly because we understand we can’t take that money with us.

Now, you may be wondering “Trent, what does this question actually DO for people?”

Why Should I Ask Myself This?

The answer is simple: it’s the way truly successful people approach life.

The vast majority of us will go to work with the plan to earn a steady pay check every week for the next forty years so we can retire and enjoy our grand-kids for the last 25 years we’re alive.  We might retire in Florida with other people in their “young 60s” and relax, but that’s usually the most exciting decision we’ve made in a long time.

We operate on the premise of “save now, play later.”

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This is a broken idea because it’s based on two flawed assumptions:

1) it is difficult to amass enough income early in our working years to enjoy ourselves without working constantly

2) we will have a “later” to enjoy

Let’s tackle the first assumption: earning enough income to enjoy your life early is difficult.  This isn’t really true, depending on what you consider a comfortable life.  Many times, we associate material possessions with happiness, so we work to buy “stuff.”

John goes to work at a job he doesn’t really like but which pays $70k/year.  With that money, he, his wife, and their three boys share a nice 3400 sq/ft brick home in a nice neighborhood.  He drives a nice car and his wife has the SUV.  After all the bills for said house, cars, kids, and other various bills add up, John can put back $7,000 year into investments for retirement (10%).

Does John sound like someone you know?  Maybe someone you see every day?  He should: he represents 60% of the American population.

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The problem with John is that there will never be enough money or “stuff” to provide the happiness he wants.  There will always be a new car or some nice addition to the house to purchase, which keeps him working at his less-than-satisfying-though-well-paying job.

The sad fact is, research has shown John would be just as happy living in a much cheaper 1800 sq/ft home with much cheaper vehicles.  People aren’t happier based on what they own; they are happier based on what they DO.

The second assumption: when we retire we will enjoy the benefits of a lifetime of hard work.

This is also false: depression is one of the major issues facing retirees.  When you’ve spent 30 years in a routine, even one you hate, finding yourself with nothing to do will leave you feeling useless.  No amount of Bridge can make up for a lack of purpose.  If you wait until retirement to enjoy the “fruits of your labor” you will miss out on life’s most enjoyable moments.

What’s the Solution to Life Enjoyment?

Do what successful people do: find something you would do for free and get so good at it people will pay you for it.

I have two friends which are stark examples of the effects of these philosophies.

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James is a very successful salesman.  He works for a company he doesn’t really like, dealing with issues he doesn’t really care about, and makes a very lucrative income doing it.  He diligently goes to work every day and his first thought is about when he will get to leave.  He has a very large house and nice cars, and his kids are taken care of.  He feels he’s “doing what he should.” If a company offers him better pay and benefits, he will probably take it to make some upgrades to his house and cars.

Kevin is on the opposite end of the spectrum.  After graduating college, he couldn’t find a job easily.  He started building furniture and signs in his shop as a way to pass the time.  He sold a few to friends and neighbors, eventually deciding to create a business out of his hobby.  He wakes up every day with ideas on what he will make and goes to work with excitement.  His wife is a schoolteacher who loves her job as well.  They live in a modest house with their little dog.  They love cooking together and hanging out with friends.  They don’t have a lot of extra money, but they can afford to live comfortable and take vacations during the summer.

Who do you think is happier?  Who stays awake at night stressed about work and dreading the alarm clock?

Now, here’s the million-dollar-question: which one sounds more like you?

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Published on January 8, 2021

How To Pay Off Credit Card Debt Fast: 7 Powerful Tips

How To Pay Off Credit Card Debt Fast: 7 Powerful Tips

Ever wondered whether your credit card debt is the reason you’re in a bad financial situation? You can’t enjoy any fun activities because a good chunk of your money goes toward debt payment. Heck, you’re even behind on some of your monthly bills.

The effects of clumsy debt management are too many to list here. This guide is going to help you discover how to pay off credit card debt fast and start chasing your financial goals.

Debt problems are the last thing anyone wants to encounter. But things can get out of hand when all the “little debts” you take accumulate in interests.

What if you knew some simple and proven ways to be debt-free quickly? Implementing them would mean better financial health for you. It becomes possible to free up cash for your “wants.” These include taking a trip or buying something you’ve always desired. All that while paying your bills on time!

Let’s not wait any longer. Here are 7 powerful tips for paying off credit card debt fast:

1. Pay More Than the Minimum Credit Card Payments

Many people only pay the monthly minimum on their credit cards. Truly, that’s the right amount for staying on good terms with your credit card company. But you need a different approach if you’re looking to achieve financial independence within a short time.[1]

Most of your payments go toward interest costs when you only pay the minimum amount. A substantial sum of your balance remains standing. As a result, it becomes more expensive to eliminate your debts.

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You don’t want to wait more than 10 years to get rid of debt while it’s possible to do it sooner. All you have to do is double that $100 minimum payment to $200 or go higher.

The good thing is that minimum credit card payments are affordable in most cases. By paying a higher amount, you reduce your interest costs, lessen your borrowing period, and boost your credit score.

2. Start With High-Interest Credit Card Debt

If you have more than one credit card debt, prioritize putting the extra money toward the ones with the highest interests. This debt pay-off strategy, known as the debt avalanche method, is essential for being debt-free quickly.[2]

First, you need to list down all the credit card debts you have in the order of their interest rates. Next, you choose the one with the highest interest and pay a significant amount toward it each month. It can be an amount twice or even thrice larger than the minimum payment.

At the same time, you make monthly minimum payments on the other debts. Their interest charges won’t be as costly as that of the first debt on your list. You only move on to the next high-interest debt after the first one is gone. Remember that your focus is on the interest rates and not the balances.

3. Revisit Your Budget

Budgeting is useful for tracking your financial moves. Once you create a budget, some tweaks along the way can make it work for you better. One situation that requires you to revisit your budget is when you’re struggling with debts. It might hurt a bit to slash some expenses. But you also don’t want to miss out on achieving financial freedom in the long run.

You can reduce some variable expenses to free up more cash for credit card debt payments. They’re the ones that change from time to time. Some examples are groceries, fuel, and clothing.

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Other opportunities for cutting down your spending lie in non-essential expenses. Instead of dining out all the time, you can cook at home more to save money. You can also share some subscriptions with friends and pay a fraction of the cost.

If you’re determined enough, you can eliminate all your unnecessary expenses and focus on paying off your credit card debt first.

4. Avoid Using Your Credit Cards

Do you want to know how to pay off credit card debt with a low income? One simple way is to stop using them. Having your credit cards everywhere you go means that you’ll be more tempted to buy unnecessary stuff. In this case, you spend money that you don’t really own and get deeper into debt.

The quickest fix to stop the debt build-up is spending with cash. You’ll be more aware of everything you can afford at any particular time. If you decide to keep one or two cards to ease the transition, always make wise choices. For instance, only use them when experiencing financial difficulties.

It’s best to categorize your fun activities under “discretionary spending” in your budget. This way, you won’t need more debt to kill your boredom. By halting your credit debt from accumulating, it’s easy to pay down what you already owe and be happy with the progress.

5. Start a Side Hustle to Boost Your Income

You’re probably turning away a lot of money by not monetizing your skills. Everyone has something that they’re good at doing. And you can use that to generate extra income for attacking your credit card debt.

If you look around your neighborhood, you can find several side hustle opportunities. It can be pet sitting, tutoring, or lawn mowing. You can start an online business by offering services such as digital marketing, content creation, and web development. Such skills go in high demand on freelance sites and job boards.

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Finding clients on social media is also a good strategy to utilize your skills and make more money. Facebook groups, Quora Spaces, and subreddits are some places to look for side jobs. You only have to join a niche-specific platform, share your services, and respond to any opportunities.

It’s possible to learn a skill, practice it, and earn from it. Use the free resources online or purchase some e-courses to get started.

6. Sell Your Used Items for Extra Cash

Starting a side hustle isn’t the only way to generate extra money. You can turn unwanted items into cash for paying off credit card debt. Whether it’s an old TV, book, or furniture, there is always someone itching to buy your used stuff.

A garage sale, as much as it’s old-fashioned, is perfect for getting your neighbors and passers-by to buy from you. You keep all the money because there are no business permits or taxes involved. While you may not make much cash, it’s better than leaving your stuff to go defunct in your storage.

Other than that, you can sell your used stuff on online marketplaces. Facebook groups are great places to start if you want quick approvals and hence sales. You only have to ensure that your listing follows Facebook’s commerce policies.

When selling any pre-owned items online, ensure they’re in good shape to avoid problems with your buyers.

7. Know When to Seek Help With Your Debt

Asking for help with your credit card debt can be challenging to do. But letting it drown you is a road you don’t want to take. While you may feel embarrassed at first, it’s the best way to get back on track when you run out of options.

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There are tons of non-profit credit counseling organizations that can offer you free guidance on how to escape the debt trap. An example is The National Foundation for Credit Counseling. They simply review your finances and help you determine the source of your financial problems. After that, they match you with an actionable debt management solution.[3]

In extreme cases, the debt solution can be:

  • Debt relief – where your debt is partially or wholly forgiven
  • Debt consolidation – taking out one loan to repay others
  • Debt settlement – the creditor forgives a significant portion of your debt
  • Bankruptcy – legal process for seeking relief from some or all your debts

It’s necessary to carefully weigh your options before deciding on the way to go. Find out how it might affect your credit score and any other risks.

Wrapping It Up

Debt is a major setback when you’re trying to prosper in life. Paying off credit card debt is essential if you want to reach your financial goals. That means having more free income, a good credit card score, and even a chance to retire early. You become more productive each day because of the peace in your mind.

So, you now have some tips on how to pay off credit fast. Go ahead and get rid of that good life progress killer!

More Tips on How to Pay Off Debt

Featured photo credit: rupixen.com via unsplash.com

Reference

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