Found Money Trap

I have had a few people ask me over the years, “What should I do with this found money?”, where found money is effectively money from an inheritance, a rebate from a source, or simply found money (i.e. unplanned income). This is the found money trap.

I have talked about this before, and I am still adamant that found money should first and foremost go toward paying down or paying off debt. If you have debt and suddenly receive extra money that isn’t earmarked for something specific, you should pay off your debt first.

The arguments I have heard to the contrary are many, and just a few I have heard are:

• I have a plan to pay off my debts, and this money is found, so I should be able to spend it on whatever I want.
• Getting out of debt is boring. I want to do something fun and exciting
• I’ll die in debt, so why should I worry about getting out of debt?

The excuses are many, but the important question to ask yourself is, the following:

If you are in debt, how did you get there?

Big Cajun Man 2009 (and many others as well)

That question really is the decision point for this found money.

If the only debt you have is your mortgage, you carry no credit card debt, or any other debt vehicles, then the arguments about having fun hold a little sway with me (but if you pay off your mortgage earlier, how much money will you save is the question for you).

If you have student loans and home repair debts that you need to pay off, remember you borrowed money from your future to get an education or to renovate or repair your house. The Future is NOW! Pay off your debts; this is your rainy day.

If you have debt on a line of credit or have a bunch of “don’t pay for a year” type debts with stores, let me reiterate, The Future is NOW! Pay off the debt you borrowed from your future; it wants you to pay it back now.

Should you be holding Credit Card Debt, or worse, Store Credit Card debt, that you have not paid off and are incurring interest charges, how can you even ask what you should do with this found money? If you think you deserve something nice from this money, you are correct, the nice thing is to pay off, or pay down a debt which will eventually crush you and your family (if you don’t pay for it), so pay the debt down.

Any other debt that you might hold, which is even riskier (owing money to finance companies, payday loan places, or non-standard loan firms (i.e. loan sharks)), you need to help yourself escape the vicious cycle, and pay them off now.

What is interesting is that folks with a lot of Credit Card debt are usually the ones who will want to squander the found money, whereas folks with less debt are the ones who would save it, or, better still, donate it or give it to their kids.

Debt Is the Future You Asking For Payment

Preet Banerjee and many others to

One of my favourite ways of thinking about debt is this.

If you think this, think again! These are the Found Money Trap in short thoughts..

🚩 “I deserve this.”
I assure you, no you do not.

🚩 “I’ll start paying debt next month.”
Like last month?

🚩 “This refund wasn’t in my budget.”
How is this even a thought?

🚩 “It’s only one purchase.”
Like the one purchase last week?

🚩 “Future Me can handle it.”
You sure about that one? Do we not remember the rule of 72, which applies to Debt as well?

Found Money = Binge Dieting

It becomes the nature of the beasts, if you can’t manage your funds and keep them under control, found money, no matter how large, will never help you. It is like a binge diet, where you might lose a little weight by only eating pickles, but eventually you will find that Cheesecake you love, and the weight will come back (with many more to add on). Debt avoidance and pay down is a lifestyle change, and you must live your life differently, or you will simply go back into debt.

No, I am also not saying that if you think you will not stay out of debt, you shouldn’t pay down your debt. I am saying, Get Help and try to get a more fiscally sound lifestyle.