So the good news is that most Australian will receive a lump sum of money after completing their 2019 tax return thanks to a promise by the current government. The amount for most people will be around the thousand dollar mark. That’s one thousand dollars you didn’t know you were going to get.
The BIG question is: What were your first thoughts when you heard of it. Was it:
- Great, we can buy that thing we have always wanted
- Let’s go on a short holiday
- Let’s give it to our kids
- Let’s put it straight towards our debt
There’s an obvious answer if you are serious about destroying your debt, isn’t there?
It’s not very often that we have a small windfall and the difficulty with most Australians is that most of us are terrible at money management. It takes a lot of will power to supress the instant gratification demon.
I’ve been there! I would justify the reason I need to spend that money.
- I haven’t had a holiday in a long time.
- I need to upgrade my car.
- I need to join a gym that I will never use.
I have used them all. Let’s have a look at an example of the power interest. You have a loan for $5,000.
Notice the total interest you will pay over five years is $1,980. What if you put your one thousand dollars on your loan? What then?
You have literally changed your one thousand dollars into $1,818. Not bad huh!
What about a thirty year loan on a property for three hundred thousand dollars. Total interest before $215,608 versus total interest after $213,313. You have now turned your one thousand dollars into $3,295.
You see, it’s not just about the physical dollars you see in your hand or appearing in your bank account. It’s the power of what one small amount today can do for your overall future tomorrow.
Give it some thought.