Hello there,
Welcome to another week with your financial literacy plug, CoachMO.
Last week, in our exploration of Commandment #3: Control Thy Expenditure, we saw how budgeting acts as the gatekeeper, directing your money with purpose using the 70/10/10/10 rule. Remember, without control, even the best savings slip away. But what if past choices have left you chained by debt?
This week, we confront Commandment #4: Get Out of Debt, the step that frees you to build true wealth
Back to our village story. John the potter, now equipped with self-knowledge, his “Future Me” savings jar, and a solid budget, felt a glimmer of hope. His pottery sold steadily, and his controlled spending meant no more frantic scrambles. Yet, shadows lingered, old debts from lean years, borrowed coins for tools or emergencies that now weighed like anchors. One misty dawn, as John shaped clay by the river, he consulted the ancient scroll once more. There, in stern script, was Commandment #4: “Get Out of Debt.” The scroll posed a riddle: “Debt: Is debt a good or bad thing?” And answered boldly: “Debt is Fire.”
John understood that fire warms homes and forges pots, but uncontrolled, it burns everything. Debt could be a tool if managed, but for most, it was a wild blaze devouring futures. The scroll warned that ignoring this led to ruin, echoing tales of high earners like the 78% of high-income coliseum athletes who face hardship post-retirement, their fortunes consumed by unchecked debts. Ignorance fueled the fire; knowledge tamed it.
Resolved, John followed the practical steps etched in the scroll. First, he stopped digging the hole; no new borrowings, cutting off the fuel. He listed all debts: Creditors’ names, amounts owed, interest rates, terms, and monthly payments. This inventory revealed the blaze’s size, no longer hidden. Next, using his budget, he calculated what he could allocate to repayment after essentials and savings.
For the approach, the scroll offered two paths: Snowball, which pays the smallest debts first for quick wins and motivation, or Avalanche, which targets the highest interest rates to save on costs. John chose Snowball to build momentum, reaching out to creditors with honest plans: “Here’s what I can pay monthly; let’s agree.” He honoured those commitments religiously, watching debts vanish one by one. Finally, the vow: Stay out of debt, using cash for needs and building reserves to avoid future fires.
Several months later, John stood debt-free, his spirit light. The village marvelled at how he had managed to turn his life around, as his business is now flourishing without chains. This commandment embodied #KnowBeDo: know debt’s danger, understand the steps, apply them to freedom.
Today, debt can feel overwhelming for many without financial literacy, but remember: money is a product of value, and unchecked debt steals it.
Takeaways from CoachMO
- See Debt as Fire: It’s useful controlled (e.g., for assets), but destructive unchecked. Assess if yours is good or bad.
- Stop the Cycle: Avoid new debt immediately, cut those credit cards if needed.
- Inventory Your Debts: List everything: Creditor, amount, rate, term, payment. Knowledge is power.
- Choose Your Path: Snowball for motivation (smallest first), Avalanche for savings (highest interest first). Contact creditors with plans and stick to them.
- Stay Free: Build habits from prior commandments to prevent relapse.
- Action Step: This week, list one debt and plan its repayment.
Next week, we’ll explore Commandment #5: Make Thy Money Multiply.
Until then, tame the fire, your wealth awaits!
Your financial literacy plug.
CoachMO
