Thursday, November 22, 2012, AM | 2 Comments
Albert Einstein observed, “The significant problems we face cannot be solved at the same level of thinking we were at when we created them.” I am sure Einstein was not thinking of debt that we create in our life. But applying his famous theory of relativity, we can easily see that we cannot solve the problem of debt with the same thinking we created it.
Theory of Relativity…
Debt depends not just on income but more importantly how you handle your finances. Your income and expenses must follow the theory of relativity. In a layman’s words, they are not mutually exclusive. One definitely knows about the other. Expenses depend on and must follow income.
Mr. Einstein was not the only genius to have exceptionally super intelligence. You can have exceptional intelligence too as far as your personal finances are concerned. However, the only intelligence you need is to spend less than you make.
Having said that, you don’t need higher level of education either to solve your debt problem. Just by discussing the problem with your family and putting all your marbles on the table so to speak, you will not only feel better but you will even start solving the problem.
Discussion needs to be focused on debt problem
When you talk to your family and in rare cases with your trusted friends, bring all issues of income and expenses in the open.
In many cases, spending is an addiction just like some folks are addicted to smoking, alcohol, and drugs. To get out of these addictions, you are advised to go and see a therapist. To have control over your spending, all you need is to be sensible in your spending.
Get to the bottom of your debt problem
Try to find out what the root cause of your debt is. Is it not enough money? Is it your free spending? Or is it the combination of both?
I come from a third world country and back there the majority of folks “ain’t got not enough money.” But they live a debt-free life.
What they do is they live – relatively happily I might add – within their means. Books have been written about this topic quite elaborately and extensively with examples. But you don’t need extensive knowledge of finances to be able to know what debt is.
Simply stated, debt gets created when you spend more than you make. We all know that but how many of us realize it in our finances? If we did, we would not be under such heavy debt like we have been the last couple of decades.
Remember what former Chief Executive of Chrysler, Lee Iacocca used to say: “If you can find a better car, buy it.” On the same token, if you can live without debt, live it. You don’t have to have a role model to live a debt-free life.
Must define debt in your mind
The dictionary says: “Debt is an obligation to repay the lender all the money intact – no less.” Well! The no less involves interest on top of the principal you must pay.
But debt is always an obligation. If you don’t find yourself responsible and obligated to repay the loan, why bother getting the loan in the first place. That’s the kind of environment I and millions of folks in the old country were raised in.
I never learned it in school. Spending and saving was never a part of the school curriculum and neither is it in the United States. Some schools may have started giving classes in personal finances but not on a large scale.
We don’t need college-level education in spending and saving. We all know – we better – how much money is coming in. The only thing left is to adjust our spending so that we save in a certain period – week, month or year. It’s Okay if the saving is no more than $5 weekly.
Saving is saving no matter how small the amount may seem to you. $5 times 52 weeks is $260. That’s the price of two reasonably priced tires which I need now for my car.
What I mean to say is you don’t have to borrow money to pay for items like tires. You can save if you really tried.
In a Nutshell
You need a different level of thinking to solve your debt problem – different than what you accumulated debt with.
In no way you should live your financial life as Dhoom Machale. You would get into debt sooner than you would expect. You must control your spending.
Once you get rid of debt in your financial life or at least bring it to a manageable level, then you can join any kind of singing and dancing to celebrate.
Let’s watch Dhoom Machale
The song is a mix of English and Indian languages. If you listen closely, you would find English lyrics. For example, the magic you bhakare means the magic you spread. Turn up your speakers.