Reaching Your Personal Financial Tipping Points

by William P. Meyers

Chapter 1

The Importance of
Your Personal Financial Tipping Points

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Interest on debt is often hidden or half-hidden. Lenders want to keep getting their interest payments; most don’t care that much about the repayment of principal if the interest keeps flowing in. So they encourage you to think in terms of a minimal payment. They don’t want you to understand the impact of long-term interest payments on your wealth or ability to spend.

When you pay federal income taxes a big chunk of your bill is paying for the interest on the national debt. If you pay rent your payment usually covers the landlord’s interest payments on the mortgage. Of course if you don’t pay off your credit card balance religiously every month you will end up paying interest on that. If you have a mortgage on a house, the interest rate is stated when you take out the loan, but when most people write their monthly check they don’t think about how much of it goes to pay interest and how much goes to pay down the actual debt, even when this is printed on their statements.

All of the tipping points have to do with your relation to credit, debt and interest. Is it easier to walk up hill or down hill? Paying interest on debts you owe is like walking up hill. In fact, for many unfortunate Americans, debts and interest are so crushing that life is like a climbing a vertical wall, with the credit card companies up above tossing stones at them trying to knock them down into a bottomless pit! Reaching your personal financial tipping points will gradually reduce the incline, until you are first walking on level ground and then rolling downhill, making more than enough money to live, with almost no effort at all!

Paying interest on debt is like swimming against a riptide. If you want to get to shore, if you don’t want to drown, you need to learn how to swim out of the riptide before you are swept out to sea. I’ll be developing this riptide analogy later in the book. My first job was as a lifeguard and swimming instructor; even if you have taught someone to swim, if you don’t warn them about riptides, they are going to drown.

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Copyright 2008, 2009 by William P. Meyers. All rights reserved.