The New Year often begins with people setting goals to exercise more and lose weight. From a financial standpoint, fat prevents you from maintaining wealth and reaching your goals. Naturally, it can be a challenge to get rid of a few extra pounds and may seem like the harder you exercise, the harder your body fights your attempt to lose weight. Financial pounds can be just as difficult as natural pounds to eliminate. Just like fat damages our natural bodies with cholesterol, high blood pressure, and other diseases, financial fat will damage our ability to build wealth for years to come.
Financial fat can come from internal and external challenges that affect your ability to maintain wealth. Internal challenges include our natural tendencies to get frustrated and not see the progress we are actually making. An example is paying off a car loan but instead of using the extra money to pay on bills, the money is used to purchase unneeded items. Having the “Will Power” to resist the urge to purchase unneeded items will strengthen your finances and allow you to maintain the wealth you are building. Whether you have $1 or $1,000,000, needless spending will leave you financially depleted. Everyone must develop a plan to maintain wealth no matter how little or much you have.
While you can control internal challenges, external challenges require “playing by the rules”. External challenges include people, governments, and other factors that have the ability to decrease your wealth. The government has rules and regulations everyone must follow to prevent their wealth from being confiscated. Federal, state, county, and city taxes are must pay items to prevent you from losing your property or even spending time in jail. People of all walks of life confront issues with taxes, and this can cause severe consequences on the individual and their family. People that do not pay taxes on their property create great investment opportunities for others. Play by the rules…Don’t give your wealth away!
While it is definitely a blessing to give rather than to receive, giving your wealth away without taking care of yourself can be detrimental to your financial health. An example is flying on an aircraft. The flight attendant instructs you to put your oxygen mask on before you help someone else. The point is that if you don’t take care of yourself, you will not be in a position to help anyone else. The same story applies in a financial perspective.
Any form of debt is considered financial fat. Debt is the cholesterol in our financial arteries. Without a budget, you may not know the debt is there, and it can silently kill you. While people state there is good cholesterol and bad cholesterol, people also state there is good debt and bad debt. Well, cholesterol is cholesterol, and debt is debt! You should get rid of both of them. Yes, a student loan and mortgage are good forms of debt, but a solid plan to pay them off early instead of 10 and 30 years respectively is a good idea. Any fat that attempts to destroy your financial future must be eliminated. Make a New Year’s resolution to “Trim the Financial Fat!”