Why you should prioritize spending more, not less, now!
Ahhh the eternal question: Should you live it up, racking up debt carefree while you are alive because you only live once? Or should you be carefully crafting your future financial freedom because in the end that is how wealth is created? Well a new study has some surprising results. In the end, maybe it just comes down to math— maybe it doesn’t have to be one or the other. Here’s the secret formula to do live it up and plan your future, SUCCESSFULLY. It’s not even about the boring balance of save some, spend some. It’s all about spending right. According to creditcard.com, the current average credit card interest rate is 15%. Furthermore, to add insult to injury, most credit cards compound interest on a daily basis, meaning you end up paying interest on the interest you are paying– often resulting in you ending up paying exponentially more than where you started. When you have the choice, opt for simple interest, which means you pay interest only on the original principal. Examples of simple interest include installment debts like mortgages and cars. So that fabulous home you just bought to live it up is probably a much better investment than the credit card debt you are racking up for outside meals, clothes, and gadgets. Some items you buy as an installment debt with simple interest often have the added advantage of appreciating in value and money saving tax deductions. Mortgage interest deduction is the highest deduction for homeowners– that means for your residence and your rental properties.
Get my rateIf you do have credit card debts, consider reorganizing them into one lower fixed rate to save you more money that you can put toward your financially free future—. So there you go, don’t skimp, just be smart about the numbers. Check out how different generations prioritize financially below:
