It's About Habits

Pam and her husband have an annuity due to winning part of a lottery. Pam wants to pay off their debts now and pay off the house next year. Dave has some tough love for Pam after giving her his opinion.

QUESTION: Pam in Gainesville and her husband have an annuity due to winning part of a lottery. They receive $37,500 each year. Pam wants to pay off their debts now and pay off the house next year. Dave has some tough love for Pam after giving her his opinion about the debt.

ANSWER: Do it. But I want you to play this call back on the Internet and listen to yourself. I’ll be transparent with you in a loving way. I’m listening to you and thinking, I’m not sure I can help this lady.

You gave me a whole list of stupid things you’ve done with money. You have no boundaries with your kids. They are grown people. They need to be on their own taking care of business. You bought a freaking lawnmower on 90-days-same-as-cash at Home Depot. Come on!

This money will not be a blessing to you if it causes you to not address those habits. Let’s make a list of the stupid things you’ve done, and never do them again. That will make you more money than this lottery will have made you. But if you’ll use this lottery money to get out of debt and you stay out of debt because you continue to do smart things with money and avoid these dumb things you’ve been doing with money, you could end up way ahead because of this. I sure hope that’s what happens for you. But if all this money does is you get out of debt, and you continue to be lazy in your decision making and you do these things that you used to do, except worse or bigger or more of them, then this lottery basically enabled you to continue the insanity. You don’t want to do that. I don’t want that for you, and I’m not trying to be mean to you. You don’t hear that in my voice. I’m not picking on you, but you’ve got to change the habits.

Personal finance is all about habits. It’s not about income. Income will come when you change your habits, and you’ve got this nice little—and it’s little, $37,000 is not life-changing—but if you handle it right and you use the fact that it paid off your debt to grow wealth, you’ll have money to give and help people with. But if you don’t keep healthy boundaries and you make bad decisions, you’re going to struggle from now on. That’s really what I want you to get out of this call more than the actual advice. But I like your plan. Pay off the debt, then turn around and pay off the house the next year. Boom, boom, you’re done—just as long as you don’t turn around and go back in. That’s the big thing there.

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