You're Doing it Wrong...Little Things Mean A LOT

Little things mean a lot appreciate what you got, if you give what you have, it forever will last.  Don't sit around and wait for all the great things in your life (sweetie) little things mean a lot - Little Things, Boyz II Men

Listen, I'm sure some of you are thinking, "I can't do that...I can't pay off all my debt." Let me tell you something, you're doing it wrong. Everything you do in life starts with what you think. It is what you tell yourself that will determine what you will or won't accomplish in life. A few weeks ago I heard a radio talk show host discussing the following article about How Much Money Americans Have in Their Savings Accounts. The fact that 57% of Americans surveyed have less than $1000 in their savings accounts didn't bother me as much as a comment I read by one man after he read the article. He basically stated that it is impossible to save money because most people are too broke and the cost of goods and services keeps increasing. You can't think like that. If you believe it's impossible to save money, guess what, it will be. You can't think of your debt as the elephant you have to eat in a day. This is a step by step journey that requires a change in your mind-set. It may not happen overnight and that's okay because little things mean a lot and they add up. I would love for everyone to be on fire to get out of debt and treat it like it's the biggest emergency of their life, but everyone is different. I also realize that life is about balance and the fact is none of us can take money or possessions with us when we die. But, I am passionate about the fact that I want everyone to believe they can do anything they put their minds to, including getting out of debt. Debt is slavery!

Little things do mean a lot. What you do over time adds up. If you take a moment and calculate how much you spend a week/month on small things like eating out or buying coffee or drinks on the weekend at a bar or club, you will see how much these things add up. Over time if that money is put towards saving or paying off debt you will be on a shorter path to financial independence. Don't believe me? Lets look at one of my favorite things, the amortization schedule. I LOVE amortization schedules because they allow me to see just how much of a huge difference a small amount of money can make towards your efforts of paying off debt. This is one of the online calculators that I have used: Managing-Debt/Loan-Calculator.aspx, there are several online to choose from if you search for amortization financial calculators. When you pay down the principal of your debt it reduces the amount of interest you have to pay and cuts down on the amount of time to payoff said debt. Below is an example of an Amortization Schedule for a 4-year $18,000 loan with a 6.00% interest rate (left side). The normal payments are $422.73. If you make an additional $130.00 payment towards the principal each month you will pay this loan off in 3 years instead of 4, as shown on the right side. I love how amortization schedules show me how quickly I can move closer to paying off my debt based on the balance left. For example, with the table on the left side, let's say instead of paying an extra $130 per month you want to do one large payment of $1000 towards the principal. Looking at the balance in the right column you will see that additional payment shaved off 3 months of payments.

So where do you get an extra $130/month? Let's look at some places where you can save money, some of these have been mentioned before:

• Take public transportation to work
• Bring your lunch to work everyday
• Make your coffee at home or drink the free coffee at work
• Learn to do your own manicures/pedicures
• Reduce your cable bill
• Become more cost-efficient and reduce your power bill
• Reduce your weekly grocery bill
• Bring your own flask of alcohol when you go out with friends
• Find free entertaining things to do on the weekend like going to the park
• Sell something

Your homework: Choose one item to focus on paying off right now and enter the terms in a debt calculator. Now create an amortization schedule with your regular payments and compare that with an amortization schedule that includes the extra amount of money you want to put towards this debt. Lastly, determine how much you need to add per month to pay it off one, two or three years earlier. Now that you have this information you can decide on a strategy and amend your goal to pay off this debt earlier if you choose.

Still don't think it's possible? Here are a couple of articles on the subject for more inspiration:

• What My Immigrant Mom Can Teach You About Money – The Luxe Strategist
• A Millionaire is made ten bucks at a time - Mr. Money Mustache