The Danger Of Rounding Up Your Debts
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; ĎI already owe 500 so whatís another 0. It takes my debt to a nice round figure 000í.
Thatís a dangerous way to think. From bitter personal experience, I know what itís like. You try to limit your debt to a certain amount, such as perhaps 000. But that limit comes and goes. Your debt creeps up above that amount. But youíre enjoying yourself, so you carry on spending.
You reach 500, but you donít want to stop, so you readjust your Ďlimití, thinking ĎIíll go up to 000, but Iím not going a penny higherí.
So you carry on spending and your debts hit the 000 barrierÖand then go slightly beyond.
Then what happens?
Correct! You increase your self-imposed limit to the next psychological barrier. Perhaps 000 this time! And then you carry on spending.
Eventually, after many more Ďfinalí limits have come and gone, your debt stands at 500. And then you see a rather nice 7 day package holiday advertised as a íspecial, once in a lifetime, never to be repeatedí offer. 0 first come, first served!
Your reasoning goes something like this. ĎThatís a great offer. Iíve not had a holiday for two years, and I could do with some sun before the winter sets in. Iíve already borrowed quite a lot. But itís a special offer, and I couldnít normally afford that type of holiday. I know itís kind of expensive, but I already owe 500, so whatís another 0. It hardly makes a difference. And Iíll worry about paying it back when I get home.í
Youíve reached another of your preset limits. But is doesnít stop there, oh no. After all, what about a new wardrobe of clothes to take on holiday! And you couldnít possibly go away without some spending money. You just wouldnít enjoy yourself otherwise.
And so the 000 mark is broken. Next stop 000, or will it be 000?
But as I said earlier, every extra dollar that you borrow restricts your freedom even further. Every dollar that you owe will cost perhaps to repay after interest. It could take you half an hour (after tax) to earn that amount.
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 itís multiplied by five hundred?
Thatís 250 hours of your life. Thatís almost six full working weeks!
And once your debt reaches 000, what is there to stop you from thinking Ďitís only another 00. It will take my debts to a nice round 000í when you see a leather sofa/laptop/hi-fi that attracts your attention?
Bang goes another 1000 hours of your life. Thatís 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 Ďno moreí?
Round figures arenít nice! Especially when it means that your debts are even bigger than before. When you owe money, every penny counts! I canít stress how important this is!
This rounding up attitude is very subtle, thatís why itís so dangerous. It draws you in. And the more you owe, the larger these Ďwhatís another [insert sum of money]í thoughts become. If you owe 00, whatís another 0. That takes you to 000. But if you already owe 000, this Ďwhatís anotherí attitude could cost you 00. That will take you up to a nice round 0000.
Donít mentally round up the amount of your borrowing, in order to justify spending even more. Every dollar you owe = less freedom.
by Stuart Laing
Copyright (c) Get Out Of Debt
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 www.icanhelpyougetoutofdebt.com for free, impartial debt help information.