Multiple Streams Income

You’ve likely heard the old euphemism “there’s no magic bullet.” It’s used to illustrate the fact that shortcuts to success are few and far between. That phrase isn’t entirely true when it comes to money, though – winning the lottery or being the beneficiary of a deceased relative’s fortune sound like two magic bullets to me. But regardless of how likely or unlikely it is that some windfall financial event will happen to you, one thing remains true: it is possible to mishandle any amount of money. From the alcoholic homeless man down the street to the federal government, people are managing sums of money across the board with great incompetence. Professional athletes and lottery winners alike have won or earned millions upon millions of dollars and frittered it all away, only to file bankruptcy as a result of their perceived financial invincibility.

There is a popular and widely-known system from a modern financial guru that teaches people how to radically turn their debts around. There’s a lot of great advice in this system – or so I’ve heard; the problem is, it’s very expensive. I believe that especially for someone trying to get out of debt, buying something they can get for free is a waste. That’s part of the reason I created this website in the first place – it’s my forum to share everything I’ve learned about money and personal finance in my (relatively short) lifetime, and to have it all written down both for my personal recollection and to help anyone else that might get something out of it. Every word on this site is free, and not in the “buy this now and get that free” sense, but in the completely-everything-you-read-or-see, no-strings-attached sense. I don’t sell or ‘give away’ e-books, I don’t have a members-only section of the site, I don’t pitch sales for pyramid schemes, and I don’t give privileged information to only a select few. But I digress.

In the absence of a magic bullet like the ones mentioned above to solve all your debt problems, all that exists is self-control. The financial system I mentioned above is filled with common sense rules and advice that anybody with some discipline can follow and put to good use. I’m going to lay it all out here, in this post, for free. But first, there are two things I need you to understand before we go any further. Be warned – I’m going to be hard on you. This is the plain truth, after all:

1. You are in debt because you cannot control yourself.
2. The only way to get out of debt is to learn how.

Plenty of hard luck stories exist, and I understand that sometimes the unexpected happens. Huge medical bills, home repairs, automobile maintenance, etc. can all be a big kick in the pocketbook. But part of my stance, and I would argue this vehemently, is that part of financial responsibility means being prepared for the unexpected. If at any given time you don’t have at least two months’ income sitting in a savings or easily accessible investment account somewhere, you are not prepared. You aren’t ready to be reading this and you should stop now.

Too many people have become uneasy at the thought of having extra money. They feel like saving or investing it is a waste because it’s just sitting there – it might not earn enough interest, or else there is the possibility of investment losses, so therefore it’s better to spend that money instead, many would say. Others start earning some bucks and get caught up in “before they hatch” syndrome – a common problem, as I have fallen victim to in the past, where we think “on this date, I’ll get this much money from this source, and after that I’ll be getting some money from that source,” etc. Looking into the future for your income sources is wise, but counting on them to come through and spending it before it’s in your hot little hands is very, very unwise. Repairs and medical bills might not be such a big deal if more of us had the wisdom and foresight to plan ahead and save.

So if you have some money put away, you’re probably in better shape than most of your peers. The next step in escaping debt is to spend less than you earn. Blah blah, I know – you’ve heard it all before. But can you actually do it? Do you have the ability to put that surplus $500 or $1,000 away instead of buying an extra piece of furniture or a new TV? The inherently obvious truth is that spending more than you have now, just because you’re counting on having it later, is just plain ignorant.

The third and final step in getting out of debt is to line up all your debts from smallest to largest. It’s that simple – don’t pay any more than you have to on any of your debts except for the smallest, which you should be paying as much as possible. When that’s paid off, lump all that extra money into paying off the next largest debt, and so forth. If you don’t discipline yourself, it’s likely that you’ll be in debt (or in and out of it) for the rest of your life. Pay everything off and then save, so that the next time you’re tempted to go into debt, you won’t have to.

Read lots more on multiple streams income – stop letting your money control you!