Sun Tzu’s guide to defeating debt
‘Know thy enemy’
So wrote the great Chinese general and philosopher Sun Tzu over 2000 years ago. Granted, he probably wasn’t talking about credit cards, but one can’t deny that it’s great advice nonetheless. As it happens, many of Sun Tzu’s writings on ancient warfare are highly relevant when applied to a modern context, and his most famous work, The Art of War, remains a best seller even to this day.
It’s not hard to figure out why. Even though it’s fairly safe to say that very few of us will ever lead troops into battle, each and every one of us is in charge of an army of one. We are all commander-in-chief of our own lives and, just like a general in the heat of battle, we must constantly make countless tactical and strategic decisions, many of which will be directly or indirectly related to money.
With that in mind, let’s see how the wisdom of Sun Tzu can be applied to personal finance.
‘The general who wins makes many calculations before the battle is fought’
When it comes to getting your finances on track, failing to plan is no different from planning to fail. Write up a weekly budget and a repayment schedule – be aggressive but realistic. This means making commitments that will require effort, hard-work and discipline to achieve, but not be so unreasonable that you’ll need to live out of a cardboard box and eat at a soup kitchen to meet your targets.
A good general also plans for the unexpected. Losing your job or getting hit with a medical bill will always be stressful, but knowing you have an emergency fund to fall back on makes a world of difference, so get started on that 3 month cushion as soon as possible. Remember: Hope for the best but prepare for the worst.
‘If ignorant of your enemy, you are certain to be in peril’
If Sun Tzu was writing about credit cards instead of war, he would have said something like “To master the card, one must first understand the card.” In a more literal sense, this means educating yourself: reading finance blogs, posting on forums and generally taking a more active interest in your money. Ignorance will get you into debt, and only knowledge will get (and keep) you out.
Never forget that a good general can never know too much about his opponent!
‘Understand yourself and you will win a hundred battles’
True strength comes from knowing your weaknesses and acting accordingly. One of mine is that I’m hopeless when it comes to remembering to pay bills and as you well know, credit cards aren’t very forgiving of those of us with a less than photographic memory. The amount I’ve spent on late fees over the years could fund a manned mission to mars, and I don’t even want to think about how many times I’ve been hit with the dreaded default rate. One day it finally dawned on me that I was just no good at paying bills, and from that moment on I started using a system. I haven’t paid a late fee since. Admitting a weakness, if even to yourself, is the first step to defeating it.
Understanding yourself also means figuring out the reasons you went into debt in the first place. This isn’t as straightforward as it might sound because spending more than you earn is almost never a cause in itself, but rather a symptom of something much deeper. Only by eliminating the root cause of your debt will you be able to conquer it for good.
‘Opportunities multiply as they are seized’
Once you start getting pro-active about managing your money, you’ll be surprised at the doors that will start opening to you. It’s not so much that these opportunities didn’t exist beforehand, it’s just that you never noticed them. When you get truly serious about being debt free, it’s almost as if you start to see the world through a different person’s eyes. Simply put, success begets success.
‘Victorious warriors win first and then go to war, while defeated warriors go to war first and then seek to win.’
Whether you think you can live debt free or you think you can’t, you’re right. As cliché as this might sound, it’s absolutely true. Don’t ever try to put success or failure down to external reasons. Granted, on some rare occasions you may win or lose a battle for reasons out of your control, but whether you win or lose the War is always in your hands.
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