One thing that drives most people crazy about money is the number of mixed messages the financial world sends out. There are the companies who throw credit at you, offering you cards with the latest bells and whistles: points to fly, free travel insurance, cash back. They waive low interest rates under your nose and promise you that you can have everything you want right now for just a small monthly minimum payment. On the other side of this see-saw, the experts are telling you how evil credit is, how it will sap your cash flow and how stupid it is to pay interest. Who would you rather believe? The guy who tells you it’s okay to go shopping, or the guy who calls you a moron for spending money you haven’t yet earned? Rhetorical question, right?
Then there are the mixed messages about saving for retirement: On one side of the teeter-totter are the Joes who tell you that if you aren’t making the maximum contribution to your RRSP every year, cat food will be too good for you. On the other side are the fellows who claim that you shouldn’t even put money in a retirement plan because the government will give you all you need. Who would you rather believe? The guy who tells you to go ahead and spend all your money because saving is a waste or the guy who tells you it doesn’t matter what you do, it won’t be enough and you’re a loser? Hmm.
The insurance industry has it’s own playground toy: On one side sits the boys in the t-shirts that say, “Term insurance is the best.” The lads on the other side are wearing t-shirts with the slogan, “Permanent insurance is the best.” So which is it?
Is it any wonder that people are confused?
While people typically associate me with debt, I’m here to tell you it’s not all about debt. Credit isn’t the monster. Ignorance is. And it doesn’t matter if you’re buying a house, buying insurance, or buying an investment, if you don’t have a balanced approach to your financial life, you’re going to be off-kilter.
People face this dilemma when they’re trying to decide whether to pay down their debt or save. When the media-focus on retirement saving heats up, the push to save can make a person question the pull to pay down debt. When interest rates are rising and those in the know propound on the benefits of being debt-free, saving is relegated to the back seat.
Doing anything whole hog and the to the detriment of the other parts of your financial life is not only shortsighted it’s dumb.
Sure, debt repayment is important. But so is having some money set aside for emergencies and to grow for the future. Debt-free isn’t the Holy Grail. It’s simply one step along the way to finding financial balance.
Tomorrow: More on Balance & Choice