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Ask Dave

The Power Of Focus

Joshua is trying to attack 10 different things at once. Dave talks to him about focusing on one thing at a time.

QUESTION: Joshua has been establishing a savings account of $12,000, but has car payments for a couple of $13,000 cars and $12,000 in credit card debt. He is also saving for retirement. Should they sell one car and use the $4,000 in equity to pay off their credit card debt or their other car? Dave details the debt snowball here.

ANSWER: Nothing happens without focus, so when you try to do 6 things at once, nothing seems to happen. You can’t get out of debt, or fund retirement adequately, or fund the emergency fund. When you attack one thing and let the other things sit while staying current, things happen. I would stop the 401k contributions temporarily, all in the name of focus.

Personal finance is 80% behavior and 20% head knowledge. If you go on a diet, you need to lose weight the first week and see results if you’re going to stay on that diet. Once you focus on getting your baby emergency fund in place, then focus on Baby Step 2 and pay off your debts smallest to largest. Sell the car and buy a $4,000 beater. Now you have 2 cars and one is paid for. Pay big, hairy payments on this car and get it taken care of by Christmas or New Years. Then knock out your credit card debt. Once you’re debt free, it’s easy to save money. Focus and knock this out!