No, I am not talking about insurance.
Even though some insurance company market the “peace of mind” slogan to entice you add insurance coverage.
What I mean is peace of mind from financial headache.
Be careful when you read the statement.
Peace of mind, not worry free or financially free.
Your housing debt is $500,000, your asset is $1,000,000. Should you be worry?
Yeah, your debt ratio is 0.50.
You are killing yourself with 50% long term liability (relative to assets) for some 20 to 30 years.
Does it give you headache. I bet it does.
Some people does not care, because they just don’t.
There is no awareness.
But behold, the bank does care, the bank is aware all the time.
Should there is change in your life that impact your finance, the bank does care, not to you, but to their loan performance.
Bank will send you reminders, not send you helping hand.
Should you be out of work, or starting off with new ventures, the bank still care.
If you cannot service your debt, no problem, the bank will auction your house, take the proceed, any balance outstanding, bank still ask you to pay.
Yes, the bank does care, their own business, not your business.
Some guru say as long as your cash flow is positive, that’s all that matters.
What if the cash flow turn to negative suddenly?
You lost job, business turn negative, investment flipped upside down, properties damaged, what is the answer to your cashflow?
The whoever guru you find in the internet, does not have the answer.
I do not have the answer.
The answer can only come from you.
You know your own situation.
If you can reduce your debt now to just $300,000, i.e. just 0.30 ratio, does it look better to you?
Or does it look more comforting to your mental psychology?
The sudden bad impact will not be that overwhelming.
It is true.
When you set yourself with not so much of long term financial obligation, you are not in the danger zone so much when life hit you with challenge.
You can service your debt obligation.
And you can look at resources you have – savings, emergency fund, insurance cash value, investment cash value, to survive the temporary setback.
This example of “what-if” situation, to me, is bad for mental health, if not taken care of early.
It disturb my peace of mind.
What I did was exactly like what I wrote above.
Reduce tremendously my long term debt.
And this strategy proven to save me long term headache due to covid pandemic tragedy.
I did that years before covid.
You see, this state of mind, can only be achieve if you know where you are, especially financially.
If you are stress with the financial situation, do something!
Or if you are not aware of your financial situation, still, do something!
Your finance maybe at the stress level, but you do not know because you do not check. Do something, check it out!
If you cannot do it yourself, spend some money to get help from licensed financial planner.
Not some youtube guru, or instagram guru or internet mastermind or celebrities.
Those guru only interested in subscription, or social media monetisation.
Get your own financial doctor, legally bound to help you, to your best interest.
That’s the small price to pay, to kick start your proper journey of having peace of mind, at least lighten your financial standing, and you can proceed with your life adventure.
And I tell you, that’s the best time spend on yourself.
#financialplanning #peaceofmind #awareness