Rounding up your debts is one of the biggest dangers to your financial position. It’s also one of the easiest ways for your debts to get out of control.
This way of thinking is best summed up by the following comment; I already owe $27500 so what’s another $500. It takes my debt to a nice round figure of $28000.
That’s a dangerous way to think. From bitter personal experience, I know what it’s like. You try to limit your debt to a certain amount, such as perhaps $10000. But that limit comes and goes. Your debt creeps up above that amount. But you’re enjoying yourself, so you carry on spending.
You reach $13500, but you don’t want to stop, so you readjust your limit, thinking I’ll go up to $20000, but I’m not going a penny higher.
So you carry on spending and your debts hit the $20000 barrier and then go slightly beyond.
Then what happens?
Correct! You increase your self-imposed limit to the next psychological barrier. Perhaps $22000 this time! And then you carry on spending.
Eventually, after many more final limits have come and gone, your debt stands at $27500. And then you see a rather nice 7 day package holiday advertised as a special, once in a lifetime, never to be repeated offer. $500 first come, first served!
Your reasoning goes something like this. That’s a great offer. I’ve not had a holiday for two years, and I could do with some sun before the winter sets in. I’ve already borrowed quite a lot. But its a special offer, and I couldn’t normally afford that type of holiday. I know its kind of expensive, but I already owe $27500, so what’s another $500. It hardly makes a difference. And I’ll worry about paying it back when I get home.
You’ve reached another of your preset limits. But it doesn’t stop there, oh no. After all, what about a new wardrobe of clothes to take on holiday! And you couldn’t possibly go away without spending money. You just wouldn’t enjoy yourself otherwise.
And so the $28000 mark is broken. Next, stop $30000, or will it be $35000?
But as I said earlier, every extra dollar that you borrow restricts your freedom even further. Every dollar that you owe will cost perhaps $2 to repay after interest. It could take you half an hour (after tax) to earn that amount.
$1 borrowed, half an hour of your precious, non-renewable life. Gone! Never to be replaced! Wasted!
Now half an hour may not seem like much. But what if it’s multiplied by five hundred?
That’s 250 hours of your life. That’s almost six full working weeks!
And once your debt reaches $28000, what is there to stop you from thinking its only another $2000. It will take my debts to a nice round $30000 when you see a leather sofa/laptop/hi-fi that attracts your attention?
Bang goes another 1000 hours of your life. That’s another six months of eight-hour shifts to look forward to!
When will it end? When your life runs out of time or the bank manager says no more?
Round figures arent nice! Especially when it means that your debts are even bigger than before. When you owe money, every penny counts! I can’t stress how important this is!
This rounding up attitude is very subtle, that’s why it’s so dangerous. It draws you in. And the more you owe, the larger these whats another [insert sum of money] thoughts become. If you owe $9200, what’s another $800. That takes you to $10000. But if you already owe $92000, this whats another attitude could cost you $8000. That will take you up to a nice round $100000.
Don’t mentally round up the amount of your borrowing, in order to justify spending even more. Every dollar you owe = less freedom.
