Food For Thought Friday: The Minimum Trap

In life, minimum is something we refuse to settle for. Why do we settle for it when it comes to our finances?

Least is Weak

Minimum is often a word that is frowned upon. It’s the least or smallest amount of something. We live in a world where we want a lot. In order to get that fancy car, nice house, or Lonzo Ball’s ridiculously high shoes, you’re gonna need a job that pays way more than minimum wage. Settling for minimum test scores probably won’t get you into the college of your dreams. In order to receive an award in recognition, you’re gonna have to do over and beyond the minimum requirements. And if you’re trying to impress a girl on the first date, doing the bare minimum will most likely cause that first date to be the last date. So in short, if you wanna get anywhere in life, don’t strive for minimum.

Now that we’re on the same page, let’s get to the real minimum—minimum payments. Don’t you just love payments? Don’t you just love getting that email notification saying that your student loan payment is due in a couple days? Don’t you just love getting paid and having a huge chunk of your paycheck going towards your car loan? It’s just a never ending cycle each and every single month. It doesn’t have to be that way though. That way of life can be over in a matter of a few years or so; maybe sooner. It all starts with that word minimum. You don’t like striving for minimum in any other area of your life, why is it different with loan payments? If your student loan payment is $300 a month, you don’t have to only put $300 towards that loan. There’s nothing wrong with putting $500, $800, $1000, etc., to the that loan each month. The goal is to pay the loan off; to get out of debt. Paying the minimum is what the loan companies want you to do. They don’t want you to get out of debt, they want you to get comfortable with debt. And when you really think about it, paying the minimum does appear more comfortable. If I only pay $300 a month, I’m still gonna have $700 that I can use on me. The new Jordans are coming out this month, I gotta get them. It’s about to be the summer, I gotta get that plane ticket and hotel down in Miami.

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Less contribution towards the loan equals more money available to spend. Who doesn’t want more spending money? It’s just a short term fix though, and a broke mindset to have. What good is it to have the latest gadgets and gear if you got thousands of dollars in debt? Who you tryna stunt for? You’re still the same broke person, you just like to look good broke. Do better! Don’t fall for the trap. Pay that mess off!

Break Away from the Trap

I currently have student loans like crazy. I cringe every time I have to make a loan payment. Why must it be so much? Oh how I miss being a kid! On one of my loans it shows me how much interest I would be paying if I continue to make minimum payments for 10 years. The amount made me sick just looking at it—$8,000! That’s ridiculous! I’m not here for it. Because of that outrageous amount, I decided to put about 60% of my monthly income towards my loans. I know that sounds insane, but doing that alone dropped my 10 year payoff date to 4 years. That’s a huge improvement. It’s still not what I would like it to be, but it’s a great start. I’m hoping for doors to open up for me to have a higher income so I can pay these loans off even faster.

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Now don’t get me wrong, I want the new clothes, I want the vacations, I want my own house, but I want to be financially free more. Having those things are great, but they’re not nearly as great when you’re still a slave to these loan companies. I rather spend a couple years or so living on a tight budget so I can become financially free, then to go the rest of my life in bondage to the loan companies. The rest of your life? Your loan is only for 10 years. If you don’t pay it off early, it’ll still be done by 10 years. Do you really believe it’s only 10 years? Most student loans take more than 10 years to pay off. Life is gonna happen to you. In a span of 10 years you might have 3 kids, health problems, job layoffs, more loans taken out, mortgages, credit card debt, etc. All of these things can turn your 10 year loan plan into a 20 plus year loan plan. You don’t know what life is gonna bring. Pay it off fast while you can.

Anything Can Make a Difference

You might be in a situation right now where you don’t have any extra money to put towards your loans. There’s still ways to pay your loans off faster. One way is to make a budget. By making a budget you might end up finding extra money that can be used towards your loans. More on that process can be found here. Another method you can do is to divide your minimum payments by 4. So instead of making one payment a month, you make 4 payments a month. For example if your car note is $500 a month, dividing it by 4 will make it $125. Take that $125 and pay it towards your loan every week. This will cause your interest to be lower. This is something I actually do now. When I used pay every month, a large amount would be going towards interest alone. This is because interest on the loan builds each day. When I started making a payment every week, only a small portion would go towards interest, and the rest would go towards the principle. This alone can probably cut your loan payoff date by 1 or 2 years. Whatever you can do, do it. You don’t have to be tied down. Chew on that as you enjoy your weekend.

"My child, if you have put up security for a friend’s debt or agreed to guarantee the debt of a stranger— if you have trapped yourself by your agreement and are caught by what you said— follow my advice and save yourself, for you have placed yourself at your friend’s mercy. Now swallow your pride; go and beg to have your name erased. Don’t put it off; do it now! Don’t rest until you do. Save yourself like a gazelle escaping from a hunter, like a bird fleeing from a net."

Proverbs 6:1-5

"Just as the rich rule the poor, so the borrower is servant to the lender."

Proverbs 22:7

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Evan Xavier
Always cheesing for absolutely no reason 😁

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