Pay It Off If You Can
I recently watched a documentary about a major collapse in the financial banking industry that happened many years ago. When the company filed for bankruptcy, a lot of people lost their jobs and potentially even more. One of the former employees said something in the interview that sort of hit me. She said that amongst all the things that she lost, her vehicle had been repossessed because she could no longer afford to pay the note.
Now alone, that may not seem like that big of a deal - this happens to people sometimes. But she went on to say that it was the first car she had bought for herself and she only had four months left on the note. That part, to me, was the devastating part; I mean could you imagine? To come so far and then have nothing to show for it. Ouch!ðŸ˜
Pay it Off If You Can
Now I know that every situation is different so I will not assume. I don't know about that woman's circumstances or expenses. Maybe she was frivolous with her money, maybe not. What I will say though is that if you find yourself in a position where you have extra money remaining after paying bills, saving, and investing (we can only be so lucky), you may try to pay a little extra on existing debts.
Why pay more if you can invest and earn more?
Some would argue that you could make more in the market (generally) rather than putting large amounts towards debts with maybe lower interest rates.
While that holds some truth, also imagine running a race and giving it your all, nearly reaching the finish line, and then you look up and there is no longer a finish line - like the finish line just disappeared. That's what I imagine it felt like to pay a car note every month for however many years with just a few months left and to then look out the window and have your car be gone. Poof! 😟
I don't know about you, but I can appreciate the security of having a sense of ownership. Say this woman had been doing well for some time with funds leftover every month. In this rosy scenario, maybe she paid a little extra on her car note every month. This could have ( not definitely) left her in a much better situation. In this hypothetical scenario, her car is paid off when she loses her job. Well, now that's one less thing to worry about. She still has expenses, but now no one is going to just come in and take away the car that she worked so hard to purchase for herself and her family. Things are not perfect, but better. Would you agree?
The point I'm getting at is life is full of mountains and valleys, sometimes you're happily climbing that mountain, doing well, and living well and then other times things are headed downhill and may even reach a low point. What you do when things are good could really help to provide a cushion for those hard times. Paying things off when you can, gives you more footing, more power, and more control.
Housing is harder, but that's where having an emergency fund comes in handy. It's imperative that we live life to the fullest, but part of that is being prepared for the rainy days. When life is good, enjoy it, but do what you can to put yourself in a position of power when things aren't going well. It doesn't rain every day, but we still keep an umbrella, we don't throw those away. Metaphorically speaking, paying things off when you can could be just the umbrella you need when it does rain.
After undergrad, I returned home for a short time. During that time, I had very few bills and a car note. It was to my advantage to pay more on that note while I had some flexibility - instead of wastefully spending my money. I was able to pay it off early and when I left home to live on my own, I had fewer expenses and a car that was paid off and all mine ( go ahead and send me my title 😂 ). Even if things got rough, I'd still have transportation, and that for me was security. 😎
✨Managing money like a boss is about living in the moment but also setting yourself up for success in the future. When you are in a position to pay down debts or prepay expenses, it may be a good idea to do so - it may help cushion the times when you're not. ✨