Sometimes the best defense is a good offense.
I guess you can bet that I’m a huge fan of this saying. A few years ago, when Jagr, Lemieux and Kovalev were playing together for the Pittsburgh Penguins, they used to put 4 forwards on their powerplay. I’m not sure but I even think that I saw 5 forwards once… who needs defensive play when you control the puck and score a lot of goals? I guess it’s just in my nature; I’m a big fan of offensive play. By nature, human beings tend to defend themselves, to protect their families and assets. So my bet is when you are going more on the offensive, your chances are that you will surprise everybody as they expect you to defend, not to attack.
Back in 2010, I wrote a piece called Lifestyle inflation infection. I renamed it on my home page as “How I suck at not paying debts”. 2 years later, I’m stuck with the same problem. I’ve been pretty good at optimizing my payment structures such as:
With these expenses, I’m now saving about $250 per month. But still, during the same period, I’ve spent some major cash:
2 years ago (November 2010), I was showing a total debt of $328K. 2 years later (August 2012), I’m at 320K. My total net worth has increased by 95K (from 145K to 240K) but only 8K was coming from paying down debt. Seriously, this is ridiculous! So for the past two years I’ve been hovering on my pile of debts living the great life… but not moving 1 iota towards financial independence. How can this be real? I can pull out all kinds of reasons out of my a… but the facts are here:
#1 I’m really good at increasing my income
#2 I’m really bad at using these increases to pay off my debts!
Yeah… the title of this post was that I was quitting on paying off debts. That’s pretty unconventional, huh? Newspapers are discussing how Canadians are deep in debt and most blogs talk about paying down debts and cutting their credit cards. On my side, I’m standing alone saying: “Hell to frugality, I’m having fun!”.
To be honest, I’ve never stressed with debt in my life. Since the age of 19, when I moved in with my girlfriend and financed my lifestyle for 6 months solely with credit cards, I realized that having debts is not the end of the world. If I ever run into bad luck like losing my job, I might lose most of my assets. That’s true. But, seriously, is it that bad? I mean, even if I lose my house and I’m back to living in an apartment. It would suck big time but in the end, the most important assets in my life are my wife and three children. There are definitely worse things in life than losing your job. But it doesn’t mean that I have to do everything possible to lose what I’ve built so far though…
The only time I started to stress about debt was this year. This is when I made it a quasi-obsession about paying them off. In the end, it didn’t bring me anything but frustration and stress. I didn’t even pay my debts since I made huge budgeting mistakes (remember the pool and car repairs?).
The reason why I’m putting an end to tracking down my debts for the upcoming months is because I want to concentrate on something else. While feeling frustrated and stressed because my debt level wasn’t going down as fast as I wished, I’ve realized that all this energy was consumed by negative feelings and it was preventing me from performing both at work and my online company. I was so obsessed about paying down my debts that I was only thinking of cutting down my expenses instead of increasing my income. The problem is that I’m probably 10 times better at making money than cutting down my expenses.
My theory is quite simple; focus on your strengths. If I put away my net worth statement and debt tracking for the next 3 months, I should be able to focus on making more money. If I do this well, my income stream should be enough to pay down my debts without me noticing. Then, at the end of January, when I report my next net worth statement, it should show a lower debt level.
The work I have done on my personal finances for the past two years is just not showing at the moment. But I know that I’ve decreased my monthly expenses and that I won’t suffer from lifestyle inflation too much in the upcoming years. I feel it’s just a matter of time before I can see the results.
In the end, I’m a lot more motivated to crank up my bonus and generate tons of money from my online company than I am to paying down debt. If I have the option of earning $1,000 (net of taxes) or cutting down my expenses by $1,000, I’ll definitely choose the first option.
I’m pretty sure you will disagree with me but I’m taking the bet. I know I can win this game with a strong offense, what do you think?
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