Distractions are a part of life. They follow you to work, they can cause you to lose sleep, and they can derail your financial life. I’m not talking about a distracting phone call or a chatty co-worker, I’m talking about being distracted from your goal by focusing on the wrong thing. A distraction can take valuable time and resources away from your true goal and purpose. This week on The Pete the Planner Radio Show I talk about this exact thing. Listen below to the clip, courtesy of 93 WIBC, for the top four most common financial distractions.
In my many years of experience these are the four most common financial distractions:
1) Focusing on assets instead of income. Building wealth is a goal for many. A way to do it is to build your assets. But what I’ve found is that people often focus on their current assets and investments more than their actual income. It’s easy to get distracted by how your assets are growing, but it’s a silly mistake to make. If you don’t make it a priority to save what you can from your income, then you will have no assets to work with. It’s sexy to talk about investments, but it’s more important to focus on your income and what you can save from there.
2) Focusing on making more money. Your income is important, but focusing on making more money is a waste of your resources. If you are constantly focused on the next raise or reaching the next bonus level you are missing the point. Often this obsession stems from a bad financial situation. You’re up to your eyeballs in debt so the obvious answer is to make more money. But what almost always happens with a raise is it’s immediately absorbed by the bad habits that got you there in the first place. If you are not resourceful then more resources will not solve your problem. It’s more important to focus on cutting back expenses to live on the income you currently make. The goal is always to live below your means. If you can accomplish that then a bonus will become just that, a bonus.
3) Obsessing over interest rates when paying off debt. Obviously a lower interest rate is better, but that’s not the point. If your goal is to get out of debt it doesn’t matter if this card has 0% interest for 18 months and that card as 18.24% interest, you just need to pay off the debt as quickly as possible. I’ve seen people shift balances around for years trying to avoid interest rates and all I can think is, just pay it off already! Mathematically should you run from interest? Yeah, probably, but who cares when the debt is still there?
4) When people get angry and yet still ignore their student loans. Everyone complains about student loans. They suck. But what I don’t understand is when I hear people complaining that they have $80,000 in student loans and they are only paying $150 a month toward paying them off. What? That doesn’t even make sense. Anger at student loans is understandable but just stewing in the anger won’t get you anywhere. Channel that anger toward aggressively paying off the student loans.
It’s important to remember that these are common distractions faced by people that are actually trying. This doesn’t even account for those who aren’t trying at all. If you find yourself focusing on the wrong thing, it’s okay. It means that you are already proactive, you just need to shift your focus.
Want to read more about distractions? Check out my Indy Star column from this week here.
Peter Dunn a.k.a. Pete the Planner® is an award-winning financial mind and a former comedian. He’s a USA TODAY columnist, author of ten books, and is the host of the popular radio show and podcast, The Pete the Planner Show. Pete is considered one of the foremost experts on financial wellness in the world, but he’s just as likely to talk your ear off about bass fishing.