Round 3: Math Edition.

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Math, the basics, round 3:

Have you done your math from round 2 yet?

You should have a spending plan at this point and…

…be telling your money where to go!

Besides the necessities, savings, investments, and luxuries that we discussed, we still need to talk about the biggest issue around money and profit: Debts.

"Debt is like any other trap, easy enough to get into, but hard enough to get out of." 

- Henry Wheeler Shaw.

Types of Debt:

Credit Cards: Seem like something everyone needs to have, but they are not. You can and should live without a credit card. – Few people can and know how to profit in this space…

Mortgages: These are indeed something that 99% of people need to have. Realistically, you can only afford a house if you're in the top 1% of society. – This debt can be worth having, pending details and your current situation.

Student Loans: These vary from country to country. You don't even need a loan to pay for college in some places! If you go into debt for life, it's not worth it. – For the Americans, run! Or go study abroad, half of the world speaks English.

Auto Loans: As soon as you buy your new car, it loses at least 10% of its value, 3 years later, it loses 50% (value = your money). – If you can't afford a car, maybe don't buy one. If it's crucial, choose a modest car and cut your losses.

-> Do you have debt or use credit? Could you not?

Inverting the Snowball

Borrowing 10 cents from Dave Ramsey one more time, this is how he advises us to manage debt, and by managing, I mean paying it in full!

Debts can easily accumulate and grow like a snowball, but nothing is lost.

You can just as easily unwind that snowball, just start rolling slowly.

First, you stop creating more debt! Do not add 1 more cent to this snowball!

Also, never making a snowball again is a great note.

Second, yes, math time. You list all your debts, add them to have a clear picture of the total amount you own, and organize them from smallest to biggest.

Third, you start by paying off all the debt you can, but always start with the smallest, and then the smallest after that, and so on.

Why?

It might not seem the most productive way to deal with a debt snowball, but Ramsey's years of experience working with people on money problems led him to this conclusion.

Most people don't have money to pay the biggest debt anyway, so they need to save or sell.

Most people also give up quickly, especially when they fail.

This way, most people can start right away, paying the smallest debt, which makes them satisfied and happy and gives them the strength to face the next debt.

With each paid debt, you get stronger in pursuing and attaining the goal of being debt-free.

-> If you have debt, you must at least rethink whether it's worth it. The best scenario is always debt-free. Can you roll your snowball?

ProfitZine's approach: Don't get into debt!

Debt to buy stuff is the worst thing you can do.

You are not gaining anything, and you are harboring a lifestyle that you cannot afford. 

This is the single biggest mistake made by poor people. 

-> Embrace a life where you don't owe anything to anyone.

Especially banks, these debts really need to go!

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Last thoughts:

Again, it's not a fun talk. I'm sorry about that, but many things in life are not fun, and we still need to deal with them, so it's better to be ready!

Don't spend what you don't have.

You will be poor for eternity, just like the people who spend everything they make every month.

99% of people are not in a financial situation to take advantage of debt, and they don't know as much as they need, so it becomes dangerous.

It could be life-ending instead of generating wealth.

"Don't let your mouth write no check that your tail can't cash."

- Bo Diddley.

-> Let's end debt 1 step at a time! 

If you are already debt-free, congratulations, and stay this way.

See you in a week.

Your Zine.