There seems to be a lot of discussion in the Internet Marketing world over how best to create a lasting business, and particularly where to reinvest your profits if you create one that works. Knowing as many affiliates as I do, this is great to hear. It’s nice that people are waking up to the reality that reinvestment is critical for long term business growth.

Unfortunately, life is rarely as simple as spend spend spend. Many of us, through starting businesses and throwing balls to the wind, have taken on large amounts of personal debt. So, when is a good time to reinvest, and when is a good time to pay back what you owe?

There’s a reason why I voted Tory in the last UK Election: spending money you don’t have is the first sign of financial insanity. There’s only so far you can kick the can down the road. I’m all for reinvesting money to build a business. But to do so at the expense of ignoring debt is delusional; as is persisting with the faith that it will go away, or that paying it back will be easier at a later date.

Everybody who ever went bankrupt once thought their debt would be easier to pay at a later date.

So let’s be honest. When you look at your earnings vs your outgoings and find an extra £100 of disposable income, do you immediately piss your pants with unbridled epileptic joy? Is the opportunity of binge consuming too good to resist? Maybe you see it as a golden opportunity to invest in a new business idea. Shit, maybe you throw your extra earnings on the stock market.

I think this is stupidity of the highest order.

Pay back what you owe. The easiest way to relieve stress while running a one man business is to minimize your outgoings, whereas carrying unnecessary debt is the stupidest way of shooting yourself in the balls if it all goes tits up.

Let’s say you’ve racked up £5000 on your Mr. Plastic Fantastic. It’s tempting to think that time will be a great healer to those debts. So when your monthly statement arrives, you wince for a moment and then toss it aside. Mmm, the sweet smell of escapism. Instead of doing the sensible thing and paying back as much money as you can afford, you stick to the minimum repayments. Yeah, that £9.57 will go a long way. You feel like the fucking gingerbread man screaming “Argos, you’ll never catch me now!” But, of course, Argos will catch you. Painfully so. And you’re not even a gingerbread man. You’re just a tosser in the red.

Next month, your new statement arrives and lo and behold, you’ve barely scraped the surface of your original debt. You are a slave to interest. Even the dude printing statements at Argos calls you his little bitch behind your back. Yes, you’ve become the picture-perfect sucker that credit companies swear by.

Why is it so tempting to turn a blind eye to debts? Worse yet, when you have money to spare, why is reinvestment – or worse, blind indulgence – more appealing than repayment? Unfortunately, we are hardwired to resist giving up what we think we already have, even when that possession is deluded. We’d rather receive £50 today than wait for £100 next year. And this attitude contrives to keep us in the pockets of the industries that exist to monetize our greed.

Well, if the large majority of us weren’t such pigeons of consumerism, we’d learn to spend what we could afford and ‘the crunch’ would be a term reserved for those living their luxury lifestyles in castles built on sand.

Whether you appreciate the implications or not, all of your debts are working against you – day by day – for as long as you allow them to accumulate interest. If you spend your disposable income on reinvestments rather than repayments, your investments better be pretty badass. Your ROI needs to be discriminately high to not only produce profit, but to pay for the money you are leaking every month through those deceptively flexible minimum repayments.

Another issue I struggle to understand is our fixation with reward schemes. Reward schemes are the sales devices used to satisfy our weakness for instant gratification, the same trait that encourages us to accept £50 today instead of £100 in a year. Generally, they are used as distractions; woven in to contracts that aim to milk every last pound of that ‘reward’ back, and so much more.

It seems that many people have yet to catch on that you can have the best points scheme under the sun, but if you fail to make the full repayments on your debts, the accumulated interest will annihilate any hope you had of a freebie. The same for airmiles. Fucking hell, don’t even get me started on airmiles. I will happily take whichever card attempts to blinds me with the least bullshit. And if I hear airmiles, I instantly know that I’m swimming in it.

The people who run up gigantic debts on credit cards, then fail to repay them under the pretense that it’s okay “cause I’m earning airmiles, innit bruv” should be taken back to school and either educated, or simply shot behind the bike shed. I haven’t decided yet. It’s the same irrational logic that inspires a mildly psychotic Bible-Belt housewife to spend her days extreme couponing in the name of good value.

To put it simply – before I spiral further in to the extreme couponing rabbit hole – clearing debts as soon as possible is nearly always the best way to spend your money. It may not feel good. But it’s the best value deal. Once you’re out of debt, go ahead, reinvest like there’s no tomorrow. Splurge your extra cash on drugs and prostitutes if it makes you happy. Whatever rocks your boat.

Just don’t choose to be in somebody else’s pocket. That’s pretty dumb, and very inefficient.

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