Today I am going to take a breath from the numbers and suggest something radical.
You don’t need MMA (you knew that). You don’t even need my spreadsheet.
Neither adds value, and really just wastes your time.
You need to follow the very simple process; (A) At the end of each month, send any extra money you have to your highest interest debt. (B) there is no ‘B’.
For the pennies to be gained by the HELOC shuffle (see last week’s post, it’s $5 per month using UFirst’s income/expense example) you are best off simply avoiding it, and merely going with my rule above.
I very much enjoy all the analogies, the MMA is like a (fill in the blank). My favorite is the GPS one. How often do you really have no idea where you are going? What if I told you I’d sell you a $3500 GPS whose volume could not be turned off and it announced exactly where you were every 30 seconds? And it bolted to your car so you could not leave it home. You couldn’t pay me to take such a device. MMA (and my spreadsheet) will let you obsessively track your exact balances every night and projected mortgage payoff with every cent you send to the bank. So what? There’s no value in that, just a waste of your time. What is your time worth? Instead of spending the time with MMA, have weekly/monthly family meetings, to discuss how you can spend more wisely. Don’t use the word budget, it’s has too many negative connotations.
Until next week,
Joe
Joe:
Everybody knows this. The problem is few people do it. As an intellectual exercise it is obvious. My aunt has had credit card problems all her life. I told her many many times how much interest she is spending and wasting money and I try to get her to understand. In 30 years she never has. Problem is not that people don’t know better but that they won’t make the change and do something for themselves but they might go by some system.
Did your aunt buy into the program? Seems to me that people who are in that deep are best off going in a different direction to get their financial house in order. Those in your aunt’s situation aren’t likely to be able to get the HELOC, and are back to the rule of “pay your debts, highest rate first.” I fail to see what value anyone finds in this package, price aside.
That may be, but MMA asks that they do just that. That they go from spending themselves into debt to magically learning how to budget themselves to a plan that pays off all their debt in record time. I don’t believe it.
I am sure my aunt has never heard of it. It was just to show that you cannot convince most people who are bad with finances that they should change even if you show them why what they are doing makes no sense. I do not think you can change anyone’s addiction by telling them it makes no sense. But if you put them on a program like AA or debtor’s anonymous or some other system maybe they can change. That is all I am saying.