In today's mail, the question:
"Is there any advantage to paying off debts annually?"
The question gives me pause, as I presume the questioner had read one of these "Financial Guru" books that said to save up and pay off your debts once a year, or pay off your smallest debts first, or contribute your 401(k) before paying off debt, or some other "system" or non-intuitive advice for reducing debt.
Guess what? All those systems are Bullshit as are the people who give the advice.
Why is this?
It is like saving for retirement. The key to saving is.....(wait for it).... SAVING!
Yes, you can stock-pick until the sun don't shine, and play games with mutual funds and investment strategies but the deal is, you have to put money aside - save it - and everything else is window dressing.
So why do the Gurus do what the Gurus do? (say that three times, fast!)
Because no one will cough up $49.95 for a book or seminar that just says "save your money" and Sooze Orman has to make the payments on her Sea Ray (Just kidding, they gave her a free one).
So, if you want to know the "Secret" to getting out of debt, it is really simple:
THERE IS NO SECRET
You have to sacrifice, cut back on spending, work out a plan to pay down your debts, pay them off and then stay out of debt. It requires sacrifice and hard work and all that other shit you can't get in a book.
Some "scheme" to pay down debt will not accelerate the payoff, and most of these schemes actually delay payoff of debt. Paying off smaller loans first instead of highest interest loans, for example, will just prolong your agony.
And other "schemes" are sure to backfire. If you put money in savings and then pay off the debt in one lump sum "once you've saved up enough" (as some suggest) not only will you pay a boatload more interest, you will be likely tempted to spend that money before you pay off the debt.
So stop looking for Genies - or secrets or other forms of weak thinking or wishful thinking. Just buckle down and do it.
Because if you send off $49.99 for the "debt kit" the only result will be that you are in debt by another $49.99.
Sorry, it is harsh advice, but completely true!