Thursday, September 7, 2017

It's Hard to Pay Yourself First

Back in the day, I worked at giant corporate bookstore when those Rich Dad Poor Dad books were really popping off.  I didn't read them until a few years later when I was working at the library and frantically saving for a cross country move, while also becoming a bit obsessed with personal finance.  In addition to a steady diet of Suze Orman, Jean Chatzky et al., I decided to try out Rich Dad Poor Dad.  I remember finding it pretty basic and repetitive, but the line where he says always pay yourself first, stuck in my head.  The idea is that before paying any bills, you put money into savings or invest it.  You will always find money for bills, because bills have to be paid, but if you don't prioritize yourself, you won't ever save.

Initially, it seemed like a terrible idea to me because I've been raised with the idea (from my banker mother) that debts need to be paid, early, if possible.  So the notion of putting money into savings when you could use it to reduce debt, and by doing so, save money on interest, just didn't hold water with me.  Except that by having no savings or financial safely net, you can potentially put yourself in a position to have to put emergencies on a credit card, and therefore pay more in the long run.

It's all very speculative, but there is merit to the idea, and I'm trying to get better about it.  For instance, I financed my car instead of paying cash for it, because that would have wiped out my emergency fund.  Ideally I would have been able to keep my previous car for many more years, but the repairs were coming more frequently, and with a two hour a day commute, I needed something more fuel efficient and reliable, so I bit the bullet.

Right now, with that car payment looming over me, I'm really fighting my natural impulse to forgo this year's goal of maxing out my Roth IRA, and funneling that money into the car loan instead.  I still have $2360 to contribute for 2017, which is $590/month, which seems impossible at this point.  But that doesn't mean I shouldn't try, and I need to keep reminding myself of that. 

It's really, really hard to focus on a goal that is so far in the future, but as much as I love my job, I don't want to do it forever.  My profession is one that people tend to never want to leave--or maybe can't since it rarely pays well, and I've worked with too too many people who should have left ten years ago.  I don't want to be that person.  It would also be nice to just work less, at some point, if I feel like it.

Despite not knowing exactly WHAT I want yet, I know that having extra money gives a person options, and I like having options.  The car loan will get paid, but so will I.

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