Guest Author: Rachel Gause
I would like to recognize Rachel as a new contributor. Rachel is currently an Active duty Marine and has been providing financial coaching to service members as a Command Finance Specialist and has been writing for some time now. She has the distinct honor of having her debt free journey published in Time magazine! We look forward to future articles from Rachel!
If you need a loan from the bank or company every month, you are living above your means.
Some of you pay your loans back in full every month, while others have to pay a fee for not being able to.
What loans do you speak of Rachel?
Credit cards. They are loans put on a card that you can swipe on just about any and everything – plastic loans. The amounts of the loans vary. The fee they charge you each month if you can’t pay back the loan also varies depending on your payment history.
The companies entice you to swipe even more with the promise of incentives like cash back, rewards points, airline miles, and a promise to report your loan and payment history to other companies (credit bureaus) that track your loan history, both positive and negative, to other businesses that will try to entice you with even more loans.
But Rachel, why would they do that?
So you can eagerly sign up to pay a business a monthly loan payment and think you are beating them at their own game of paying your balance off in full.
So instead of you saving and investing your hard earned money, you enthusiastically give them money each month instead. Some of you have loans from multiple loan companies and proudly flash your plastic loans.
Rachel, what would happen if I stop signing up for loans each month and pay back all the loans I owe?
You, my friend, will start building assets and increasing your net worth. You could have a six month emergency fund created, invest money, save for your kids college fund, pay off your house, or even buy a car with cash. Take vacations with cash. Help the widows and orphans.
Soon, your investments will start making money for you each month. The earlier you grasp this in life, the more compound interest is on your side.
So will you continue to give majority of your hard earned money to loan companies for the rest of your life or make a financial change to start investing in your own future?