Build Your Financial Dam
How is the river of your finances flowing? It isn't a difficult image to see, your cash flowing in, and flowing out to the various needs that crop up daily as your life moves on. The trick is in holding the flow long enough to see any of it build up. This is the trick to building wealth.
When a farmer needs to build up some water for a drought, the first thing most turn to is damming a stream, building the water up behind it. It is far more achievable than creating more rain. Money can be exactly the same way, and most people that have built their wealth began with the habits of forming financial dams against money outflow.
It is impossible to completely stop the flow and remain in modern society, and any blockage will mean some immediate sacrifice. It is up to the individual to decide just what kind and level of sacrifice they can tolerate. The important factor to remember is that you aren't giving it up entirely. You are trimming today to improve tomorrow.
Even small sacrifices make a large difference in the final sum. Look at a daily cup of specialty coffee. Assuming you have found an exceptional shop where your favorite is only three dollars a cup, and that you only do it at work, the total, before interest, is seven hundred and fifty dollars. Compounding the interest over that same year and it doesn't take much to cover a thousand with that cup of coffee. Now you can start to see some of the obvious benefits of building that dam.
Interest can be a lead in the dam, rather than another tributary, if not managed properly. Debt is one of the biggest wealth killers. The main reason is interest. Compounding daily, the interest against you works like the desert sun to evaporate away the reserves you have worked so hard to build, and in return, you get nothing. On a typical thirty-year mortgage, the interest costs more than the home, and adds no value to the property. The trick to plugging this hole is to limit the amount of debt before it becomes a raging dam break. Buying used auto or a smaller house can help prevent the leak. Not only does this prevent more initial money from going over the dam, it keeps the interest leaks to a minimum. It also makes it easier to pay it off earlier and plug the leak entirely.
Your dam can still be busted by the unforseen emergency. Life comes at you out of the blue sometimes, being short of cash at these times can force you into high-interest credit card debt, but a payday loan from www.cashdoctors.com.au can tide you over and be eliminated on the next payday, eliminating the leak before it can drain you.
There isn't a perfect dam for everyone. You have to find the right one for you. The key is to stop the outflow, because it is much easier to manage than the other end of the river.
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