Over the years, I have learned the following: Make poor decisions with your money and you will become poor; make wealth enhancing decisions with your money and you will become wealthy.
So how is it that some individuals end up in the middle? They do some of both!
Over the years, I’ve had the opportunity to talk with individuals at all walks of life. From high income to low income and everywhere in between. I have provided input to attain healthy financial goals with many of them. I’ve also learned and experienced that not everyone will follow the coaching and/or instruction provided. Let me share a story of one individual who comes to mind.
A friend of mind once had a desire to refinance her home. Her bank was willing to provide her with a large sum of money (cashing out her equity) that she would pay back over a 30 year period of time.
The house was nearly paid off at the time. I believe she had less than 3 years left if she was only paying the regular mortgage payment without additional principal.
I recall trying to dissuade her from refinancing her lovely home. The home was nearly clear from all obligations. She was so close! However, as it is with all clients, the final decision was all hers.
Unfortunately, my reasoning butt heads with her desire for instant gratification so she went ahead and refinanced the home. Basically she was starting back over from square one. Amazingly, she actually had the benefit of a prosperous real estate market on her side and guess what? She had acquired equity in her home again!
So another opportunity presented itself to either continue paying on her 30 year mortgage (which she could comfortably do on her income plus make additional principal payments) or refinance again. Regrettably, she again made the decision to refinance.
Shortly thereafter, due to some poor money habits, she was struggling to make payments and had become very distressed. She began borrowing money from friends and family. It affected her job, her relationships and her general well-being. The weight had become so heavy that when it was time to leave the home due to foreclosure, she was happy to receive cash for her keys i.e. the bank paid her to leave.
Borrowing money from family and friends puts pressure on relationships and often times, the money pressures still remain. It is not the money that is ultimately the problem. It is the individual’s poor financial decision that’s the problem.
In this situation, there were no savings kept from the equity that was pulled, no investments made from the equity, no emergency fund and now, no home. Relationships fractured at best.
I ask you today to evaluate your money habits at the smallest level. A portion of all of the money you make is yours to keep. 10% is a great start. Let’s delay gratification a little more until we accomplish more of our goals. No goals written? Let’s write some, your money will follow. As the saying goes, money makes an excellent servant but a terrible master.
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Brandon and Gina Wilkins are financial coaches and co-founders of Financial Freedom Builders LLC. Mr. Wilkins is also the author of the financial classic, Getting Rich is Simple...But It Ain't Easy! They are available for coaching, workshops and seminars designed to help you take control of your finances.
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