Eliminate Debt Today
_In order to set up a successful investment plan for your future, the number one piece of advice offered by financial professionals is to get out of debt. Only when you are out of debt can you start to think about investing in your future. After all, saving on top of a deficit only sinks that money into a black hole.
For those of us who are eager to get started investing, this can seem like such a bother. After all, it may seem like there’s no forward movement when you’re just paying off debt. But take heart – clearing that bottom line is one of the best investments you can make.
Debt is one of those financial issues that starts small and grows exponentially. The negative effect of debt is similar to the positive affect of compound interest. We’ve all heard that if we invest “this much in this account at this rate by thirty, we’ll be millionaires by the time we retire!” This theory stands up, due to the substantial gain caused by compound interest. Your debt works in the opposite way.
When you are in debt, you are typically paying interest on your principle. Even if you are working off credit cards and have a system set up where you’re juggling a zero percent interest rate with repeated balance transfers, you’re most likely paying transfer fees. Worse, if you miss a payment you’ll be slapped with a late fee or a huge interest increase.
Either way, interest is that percentage on your balance that bites into what you can pay off and if you’re only paying the minimum balance on your loan or credit cards, whew! You are making the company who loaned you that cash a pretty penny. That’s money you should be taking home.
Paying off your debt is an immediate investment. When you stop paying interest, it’s like having an investment where you are grabbing a 29% return. After all, most people with poor credit are paying about that much per month for credit cards. Even if you’re only paying 10% on a conventional bank loan, that’s still 10% you could be putting in your pocket. Imagine you were paying that money to yourself every month instead of your debtor.
Whittling down your principle is a critical step in achieving this goal. It will take a serious commitment on your part to put enough money forward to do this. Sometimes, the best option is to set up a direct transfer from your paycheck to your credit card to prevent temptation to dip into your credit card funds.
More often, it means setting up a budget to live below your means. This may be an adjustment, because people often get into trouble trying to live above their means.
Whatever your method, choosing to pay off your debt is the smartest investment in your future you can make. Clearing your debt is well worth it to achieve future financial stability. Putting high interest in your pocket instead of someone else’s is always the highest return.
For those of us who are eager to get started investing, this can seem like such a bother. After all, it may seem like there’s no forward movement when you’re just paying off debt. But take heart – clearing that bottom line is one of the best investments you can make.
Debt is one of those financial issues that starts small and grows exponentially. The negative effect of debt is similar to the positive affect of compound interest. We’ve all heard that if we invest “this much in this account at this rate by thirty, we’ll be millionaires by the time we retire!” This theory stands up, due to the substantial gain caused by compound interest. Your debt works in the opposite way.
When you are in debt, you are typically paying interest on your principle. Even if you are working off credit cards and have a system set up where you’re juggling a zero percent interest rate with repeated balance transfers, you’re most likely paying transfer fees. Worse, if you miss a payment you’ll be slapped with a late fee or a huge interest increase.
Either way, interest is that percentage on your balance that bites into what you can pay off and if you’re only paying the minimum balance on your loan or credit cards, whew! You are making the company who loaned you that cash a pretty penny. That’s money you should be taking home.
Paying off your debt is an immediate investment. When you stop paying interest, it’s like having an investment where you are grabbing a 29% return. After all, most people with poor credit are paying about that much per month for credit cards. Even if you’re only paying 10% on a conventional bank loan, that’s still 10% you could be putting in your pocket. Imagine you were paying that money to yourself every month instead of your debtor.
Whittling down your principle is a critical step in achieving this goal. It will take a serious commitment on your part to put enough money forward to do this. Sometimes, the best option is to set up a direct transfer from your paycheck to your credit card to prevent temptation to dip into your credit card funds.
More often, it means setting up a budget to live below your means. This may be an adjustment, because people often get into trouble trying to live above their means.
Whatever your method, choosing to pay off your debt is the smartest investment in your future you can make. Clearing your debt is well worth it to achieve future financial stability. Putting high interest in your pocket instead of someone else’s is always the highest return.