Where the Cash At?
Jamilah McCluney
I guide individuals toward financial security and wealth creation. By translating complex financial concepts into actionable strategies, I empower you to manage debt, build assets, & achieve your unique financial goals.
One of the most important factors of money management involves how you pay for capital purchases. If you’ve never heard the term, a capital purchase is an item that costs $5,000 or more. Most people find comfort in paying cash for those purchases, while eliminating the cost or stress of paying interest. How you pay for capital purchases will have a long lasting effect on your money and it’s ability to grow.
Imagine you’re a farmer and you want to grow corn. You hear there’s a man in town who will loan you the seeds to start the crop and he’ll come to you later for payment. So you take and plant the seeds and begin your cornfield. You prepare and treat the land and make sure you water and feed the crop when necessary. You pull any weeds, and remove any bugs or animals that will hinder your corn for nearly 5 years, until BOOM, you’ve got action!?
After all your hard work, your corn lender pulls up and notices how tall and full and healthy your cornfield looks. He decides he wants payment and asks you to pay up. Would you pay him with the ears of corn, or would you pay him with the stalks full of corn?
If you pay him with ears of corn, you’ll be able to quickly produce more ears of corn. If you pay him with corn stalks, you’ll have to take time to plant, water and tend to the crop again before there’s any growth.
Pretty corny I know, (I couldn’t resist- lol) and I also don’t know if you grow corn from seeds or kernels, I digress, but you get the gist here, right??
If you pay cash for capital purchases, you are essentially paying with your corn stalks and in doing so, you are foregoing the most important aspects of your money: time and opportunity.?
You’re not only wasting the time it took to grow your money and to increase it, but you’re waisting the opportunity for that money to continue to grow and produce hundreds or thousands of dollars over time.?
Say it with me class, it doesn’t matter how much you make, it matters how much you keep!?
One of my jobs as a financial coach is to help my clients understand how to fund/finance capital purchases and the impacts of those choices. How you buy and for things matter, not just in the moment, but over the course of your lifetime as well.