Cash Cycle or Debt Cycle – Your Choice
Hi There, Friends of Freedom:
As is my custom, I was sitting with my morning beverage today
looking through the investment and investor news
getting a handle on what the media might be talking about
that would spook my clients and de-rail them from the plans
we have put together to ensure that:
1. The family is properly protected in the event that they would “die too soon”
2. They are moving out of the “debt cycle” in order to get into the “cash cycle”, and
3. They are on the road to financial freedom, and will never have to worry about “living too long”
So what is…
THE CASH CYCLE VERSUS THE DEBT CYCLE
With the economy and what’s going on out there – there’s pensions disappearing, people that are overloaded with debt, getting the wrong financial advice, having the wrong financial habits… we need to go back to basics.
Most of us do not have the basics down. We act like we do, we talk like we do, we talk about diversification, but the fundamental habit is really the issue here… If you look at what’s going on is – we’ve been taught the wrong financial habits – that’s why we are in this kind of financial situation.
So let’s take a look. Most families right now are in a debt cycle versus a cash cycle. The debt cycle is automatic. We get into debt just automatically right now. You are not in control of your finances. Outspending your income. Constantly borrowing to maintain a life style. And so what happens in this kind of situation is – you’re always behind the eight ball. You’re never getting ahead.
So in order to get in front of the eight ball we need to get into a cash cycle habit. Very few in this country are in a cash cycle habit. The cash cycle habit is where you are debt free, you are buying things cash, you are in control of your finances, so now you are proactive with your finances. You are in control of where you are going.
If you look at the overall picture – of all the threats to your financial situation, none is more dangerous than debt.
That’s the reason why we’re not maxing out our retirement accounts, we’re not putting away towards our investments, our college plans for our kids, … it’s because debt is overloading our financial situation.
The solution to the problem is very simple. Step one is “pay yourself first” – get into the cash cycle habit – we’re going to talk about the three fundamental accounts in a future posting – but also, hand in hand with this, is to set up a debt elimination program – start “stacking” your debt, to eliminate it.
Psychologists say that with all the dies fads there are out there, people get on them, and then get off them, and sometimes they are worse than before they got on them… because they never replaced a bad habit with a good one.
Finances work exactly the same way.
You have to understand that if you are going to eliminate debt you need to start replacing that with a habit of paying yourself first and investing…
THE CASH CYCLE VERSUS THE DEBT CYCLE
And how to structure that in a highly efficient and effective way will, my friends, be the subject of a future posting…
I AM Peter Pocklington. The sad part of this article is that when I am out and about talking with families about their need for the comprehensive financial needs analysis – which we provide free of charge – because we feel it is that important – I so often hear them say “Its already too late”. Just know that it is never too late. There are always things that can be done – the question is will you do them.
Click here to view our short video “That’s How Life Works” –> albuKB8sG0o
Published: August 14, 2012, 04:12 | 2 Comments on Cash Cycle or Debt Cycle – Your Choice
Category: Financial Education