Personal Finance is Like Laundry

Money Management /
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Do you ever have one of those days where you are on fire about housework and you buzz around like a possessed Tasmanian Devil?  You know, that day where you FINALLY tackle that mountain of laundry and get six loads done?  At the end of the day, you feel completely awesome about yourself. “You,” you tell yourself, “are a rock star!”

If you’re having such a day, I commend you.  Tackle that laundry dragon!  I really don’t want to diminish your sense of accomplishment.  But I have to be the bearer of bad tidings.  That laundry dragon you just slayed?  It will be back.  Repeatedly.  Over and over and over.  No amount of magic will completely rid you of the need to do laundry.

In truth, all housework is this way.  You wash all the dishes, pots, and pans after a big meal, and your kitchen is spotless.  But after fifteen minutes, dirty dishes begin to repopulate your counters and sink.  The joy of accomplishment in housework is fleeting and temporary so when you’ve achieved a successful housework challenge, enjoy it while you can.

In this way, your finances are just like laundry.  If you don’t routinely tend to the ongoing practice of keeping your household finances in order, the mountain will grow.  The result is when you decide to do something about it, you should prepare to spend an entire day.

The better approach to laundry AND your money is slow, methodical, and steady progress.  Staying on top of regular financial tasks will help you avoid a back-log.  Not only will you ultimately save time, you will also avoid the risks associated with letting your financial life accumulate like a pile of laundry.  Let’s evaluate some of those risks.

Late fees.  If you pay your bills late, it’s likely you will rack up late fees.

Interest charges.  If you don’t pay your credit card balance in full, you begin accumulating interest charges.  Not only that but those charges compound each month that passes that you don’t pay the balance in full.  Pay late AND don’t pay in full and prepare to get whacked with both fees and interest.

Bad credit score.  Continue to be late with your payments and watch your credit score plummet.  Allowing your credit to tank ultimately makes it more difficult, if not impossible, to get credit in the future.  If you are able to get credit in the future, you’ll pay higher interest rates because you are a poor risk for the lender.

Opportunity cost.  If you don’t invest and manage your money to reach your longer-term goals, you are missing out on a huge benefit: The benefit of time.  Compound interest is “the eighth wonder of the world,” according to Albert Einstein.  The longer your money has to grow, the faster it will grow.

Avoid smelly piles of neglected financial laundry and the stressful nightmare of unpaid bills and other financial tasks.  You just need some discipline and a little regimen to stay on top of things.  A regular schedule will go a long way toward reducing the stress of unfinished tasks.

How about you?  Do you tend to let housework, laundry, and your money tasks accumulate?  Or do you have a solid routine to stay on top of things?  Share your methods below.

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