JULY 15, 2013 Admin | July 15, 2013 What is the “monthly payment mentality”? How can you avoid it? Why should you avoid it?
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The monthly payment mentality is when you buy stuff that you cannot afford with money that you do not have. You can avoid this mentality by ridding yourself of all debt that is not tax deductible, then tackling the tax deductible debt (including your mortgage), stopping picking up new monthly payments, and pay for as much as you possibly can with cash (or, if you do charge anything on your credit card, pay your credit card off in full every month). You should avoid the monthly payment mentality, because you should not take on debt that you cannot afford (if you are having to make monthly payments, you cannot afford that item). Taking out debt on items that you cannot afford is going to cost you way more than if you would have just saved up the money until you could pay for the item with cash.
That was a wonderful answer, Katherine. Let’s recap. The monthly payment mentality makes you think you can have it all with a low monthly payment. You can’t! That monthly payment is part of a big debt that includes interest and it’s usually attached to a depreciating asset that will go down in value very, very fast. Follow Katherine’s advice. Avoid monthly payments and pay cash for what you want. Your financial future will thank you.