Wednesday, May 22, 2024

Make Your Money Work for You by Getting Out of Debt

Your money wants to grow. There are so many ways to invest these days, and as so many financial advisors will tell you, you need as much time for it to grow as possible. Compound interest is your best friend when it comes to creating wealth.

But when you’re in debt, interest becomes your toughest enemy. Whether or not to invest or pay off debt is a difficult question to answer. Some financial advisors say you should never put off investing, but that’s often because debt becomes a long-term lifestyle that people never leave behind.

If the debt you’re paying is low-interest and you can reasonably expect to earn more by investing, by all means. But when it comes to high-interest debts like credit cards, your first step has to be paying them off. 

Take Advantage of Debt Relief Programs

Before you can start dreaming about how you’re going to spend all that money you no longer have to hand over to the credit card companies, you need to put your debt to rest once and for all.

There are a number of ways to deal with unsecured debts, but not all of them will make sense for your financial situation. If you need help dealing with credit card debt problems, you can start with a financial assessment from a certified Credit Counsellor from a non-profit credit counselling agency. They review your debts and budget, and they can provide help dealing with your creditors.

One debt relief program worth investigating is a Debt Consolidation Program. It involves reducing or stopping interest charges on those high-interest loans like credit cards while putting a stop to collection calls, too. It can trim your expenses and speed up your timeline for paying it all back.

The next step is using all that money you save to generate more wealth.

Invest in Your Retirement

Now that you’re in the clear, it’s time to start thinking about what you can do with all of the money no longer going to the credit card company. The most obvious answer is investing in your retirement – or whatever your next financial goal happens to be.

The sooner you start to save for your retirement, the better. The later you start, the more you have to save each month to have a reasonable amount of money by the age of 65. Wait too long, and it may not be possible to save the optimal amount. Even contributing small amounts each month is a good start.

Start Your Own Business

At a certain point in your career, you may have to start your own business to earn more money. Entrepreneurship is not a short-cut to getting rich. There are a lot of risks to branching out on your own, and success definitely doesn’t come quickly. It takes a lot of dedication, hard work, and long hours, no matter what you decide to do.

The average entrepreneur pays themselves a salary of $68,000, which is considerably higher than the median, but it’s not exactly a path toward becoming super-wealthy. You’re also taking on all of the risks yourself, and as the last year has shown, a lot can happen that’s beyond your control.

That said, starting your own business gives you the freedom to work the way you think is best. It also means that when you are successful, you’re not making someone else money. You’re not bound by a limited salary. When your business begins to earn more, you begin to earn more. 

When you’re in debt, going into business for yourself can be too risky of a move. It will also be harder to qualify for a business loan, so you will want to become debt-free first.

Go Back to School

Sometimes the best investment is yourself. If you’re feeling stuck in your career or unhappy with your salary, you may need to upgrade or change your skill set in order to earn more money. Even if you feel like you’re too old to go back to school, consider how much longer you have in the workforce. It can be a challenge, but it could be worth it.

There are two factors to consider. The first is the opportunity cost of returning to school. You can save the money you need for tuition and living expenses, but there’s also the lost income if you can’t work through it, and not all programs are designed to let you do that.

It all starts with getting out of debt. When you owe nothing, you have more freedom to decide the course of your life.

Sam Allcock
Sam Allcock
Sam heads up Cheshire-based PR Fire, an online platform that has already helped over 10,000 businesses to grab widespread media coverage on their news at an extremely accessible price point.

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