27 Apr Turning Small Changes Into Great Habits
We can’t avoid the power of compounding. Either it’s working for us or against us. It’s our choice. Financial institutions use it to their benefit. With a little bit of knowledge, we can harness the power of compounding to our benefit too.
Time is NOT on Our Side
Few of us feel that we have enough time. Most of us work hard for someone else. We come home exhausted. Before we can relax, there’s a list of ‘to dos’ that demand our attention. We cherish a few moments to unwind and relax.
Time is not our friend. A postponed decision today also postpones our realizing dreams. If you’re thinking, “What if I know that I’ll have the money?” My response is simple – ‘It doesn’t matter’. If you are sure that you’ll have the money, it means that you could achieve your dream sooner and begin working toward your next dream. It’s an opportunity missed!
The Rule of 72
There’s an easy way to illustrate my point. In finance, there’s the rule of 72. If you want to know how long it will take to double your money, take 72 and divide it by the interest rate that you are earning on your money. For example, if you expect to be earning six percent, 72 divided by 6 equals 12. It will take 12 years to double your money. If you think you can earn 18 percent, 72 divided by 18 equals 4.
Every day that you don’t invest your dollars, it’s taking that much longer for you to double your money. Do you have another way of doubling your money without working harder? Probably not! If you did, you wouldn’t be working for someone else. The worst part is that no one is yelling at you demanding that you not waste another day.
Our Biggest Mistake!
Time is quietly slipping away unnoticed. We think we have time. We don’t. The longer we wait, the greater the impact. Some day in the future when a dream you cherished cannot be achieved, you’ll realize that time has become your enemy.
Notice the perspective. We’ve been talking about how long it takes for you to double your money. If we owe money, it works the same. The rule of 72 tells us how much more we’ll be paying the person or company on top of the amount that we borrowed. Using our examples, in twelve years we’ll be paying double the price for six percent loan and just four years for an eighteen percent loan.
It can get worse. If we aren’t mindful of why we are borrowing money, not only are we paying double the money, the loan is preventing us from investing in our future.
CashMap’s Line of Credit Strategy Harnesses Time
Today’s market requires you take greater risk to get a greater return on your money. CashMap’s strategy enables you to put your income to work dramatically lowering your cost of borrowing and accelerating your payoff date. This gives you the freedom to save and grow your savings to either invest in your first home or to use the equity in your home or investment property to make additional investments.
You can’t afford to have your money sitting idle in a checking or low interest savings account. Decide today to keep your money actively working for you. Write down the dreams you want to achieve.
Once these two decisions are made, the actions you take will follow your new set of priorities. You won’t feel like you’re being forced to budget You’ll begin managing your money by depositing your dollars as quickly as possible and scheduling payments as late as possible. Why? You now understand the power of time and of compounding. You’ve brought your future into your present.
You’ve created a new set of habits. You’re on your way!
Ready to start your journey towards financial freedom? Get started today!
I’d love to hear from you. Please send your questions, topics or suggestions to dennis@cashmapconsulting.com. You can also follow me on twitter at cash_map.
No Comments