Weird Financial Math

Weird financial math occurs in many households.

Here’s usually how it goes.

  • Person is scheduled to be paid next week.
  • Person thinks, “I’ll spend some of that money now on Item #1 on my credit card.”
  • Person spends money on Item #1 on their credit card.
  • They also spend money on Item #2, 3, and 4 using that credit card.
  • By the time the person actually receives their paycheck, it has already been totally spent.
  • Instead of repaying the credit card, they spend the actual cash from the paycheck on items #5, 6, 7, and 8.

Do you see what happens?

They are attempting to make ONE paycheck cover the costs of items that equal TWO paychecks.

It is weird financial math.

While 1 + 1 really does equal 2, they are attempting to make 1 + 1 equal 1.

I prefer to use the weird and wonderful math that happens when compound interest works for me!

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