Over 80% of Americans carry some form of debt. Is this halting more than 80% of them from accumulating wealth? Certainly, debt can present considerable obstacles in meeting one’s financial objectives. I found this out immediately upon my college graduation, when I discovered I was $30,000 in debt. I had to forego certain desires to focus on paying off this amount. It made traveling, buying stuff for my current house, purchasing my first home, planning a dream wedding, saving for my kid’s education, or even investing seem beyond reach.
However, I recently comprehended that while paying off my debt might prevent me from doing all these things at once, I could still initiate investing, a crucial financial milestone everyone ought to target.
ARE YOU ASPIRING TO ACCRUE WEALTH? BEGIN INVESTING AND EXPANDING YOUR REVENUE
It’s effortless to envy people with seemingly endless wealth, like celebrities, and ponder upon their good fortune. Not everyone possesses a knack for singing, dancing, or acting, which decreases the likelihood of becoming a celebrity. So, the ultimate recourse left is investing. Despite dealing with debt, if you aspire to achieve financial security and have plenty left after meeting your usual expenditures, investing is mandatory.
Common misconceptions about investing paint it as hazardous, a matter to be deferred until later in life, or a task to be undertaken after clearing all your debts. The reality, however, suggests starting investing as early as feasible allows your money ample time to compound and yield benefits over years. That’s how many manage to aggregate assets worth over a million dollars by retirement, not via luck or inherent wealth. The secret to wealth accumulation is embarking early, despite grappling with debt.
FREE UP $100 FROM YOUR MONTHLY BUDGET TO INVEST
You may be surprised to learn that you can initiate investing with $100 or less. Investigate if you can ease up any of your present expenditures to accumulate $100. Cut out any unnecessary spending or deduct $10-15 from your fluctuating costs.
Next, select a dependable broker to help you distribute your funds into ETFs and mutual funds. Mutual funds are investments composed of diverse individual stocks and bonds shares. They hold a fixed daily price, with additional costs that encompass commissions and operational fees.
ETFs (Exchange Traded Funds) are similar, but usually boast lower expenses than mutual funds and are bought and sold similarly to stocks.
Another relaxed approach to investing is securing contributions to your retirement fund account. If your boss offers a 401(k), ensure you contribute to it and take maximum advantage of any matching contributions. If your boss does not provide a retirement scheme, you can open a Roth IRA. Self-employed individuals can start a SEP IRA.
If you wish to invest externally to retirement and prefer evading the investment market specifics or risky maneuvers, you certainly require a broker. Fortunately, you can select a cost-effective digital brokerage site like Loyal3, Betterment, or Fidelity Investments to conveniently manage your investments online.
PASSIVE INCOME GENERATION
Besides investing, cultivating passive income is another way to gather wealth, even while combating debt. A blend of active and passive income raises your revenue while minimizing efforts.
Assets like real estate might come to mind when thinking of passive income. However, other techniques, which require less initial investment, are also viable. You could create and sell a product, begin building affiliate income referring individuals to products you appreciate, author an ebook/books, or initiate a blog and monetize it for additional income.
Passive income might not be an easy venture, but like investing, it demands time and substantial effort to create an extra income stream.
SHAKE OFF THE FEAR OF DEBT
Don’t let the fear of debt hinder you from saving, investing, or striving to earn more. While it is pivotal to focus on paying off your debt eventually, if your debt has low interest and you still have a few repayments to make, avoiding wealth creation is not a wise decision.
Attaining a healthy balance between wealth creation and debt repayment will benefit you presently and in the future.
So, are you saddled with debt? How are you strategizing wealth accumulation? Have you begun investing despite being in debt? Visit smartasset.com to learn more.
