I have a very special Article from Jacob @ DollarDiligence Today! Him and I have very common goals when it comes to our financial future as well as sharing the same age of retirement goal of 35. Enjoy the Article.
When debt is high, one of the first instinctive priorities is to pay it off as fast as possible so it
doesn’t remain a problem. Seeing a high balance can be overwhelming, which is what happened
I saw my student loan balance in combination with other debts and alarms went off. I knew I
needed to pay down the debt as fast as possible or I was going to be paying more in interest than
I should. I knew that having the debt was going to keep me from reaching my financial goals and
achieving financial freedom.
I dove in headfirst and tackled my debt so quickly that I managed to pay it off in no time. That
was great. That’s exactly what I wanted. My goal is to retire by the time I’m 35.
Unfortunately, there was one thing that I forgot to do, and that was invest some money.
When you invest, you start growing your money. The sooner you invest, the sooner your money
grows. By investing early, you give the money more time to grow. It can be difficult to decide
whether to pay down your debt – helping you escape the looming anxiety that comes along with
it – and investing.
What I Would Have Done
First of all, I was six years into making the minimum payments on my student loans when I
realized that I needed to pay more. I looked at the remaining balances and realized that making
the minimum payment was barely making a dent.
I wish I would have realized sooner that I needed to pay more than my minimum payments. I
would have taken on freelance gigs, a second job, and started the budgeting much sooner.
However, I would have tackled the big picture much sooner, and that would have included
The first thing I would have done would be to make the minimum payments on low-interest
loans so I could put more of my money toward the loans that had interest rates over 7%. These
were mainly my private student loans which had higher rates because they are lent based on
credit, which at the time wasn’t that great.
The second thing would be to take the money left over after paying the bills and invest it.
The third thing would be to take the money left after paying off loans and invest more. Investing
can be a very valuable tool for early retirement. By using this particular method, paying off debt
and investing money can result in a greater return on investment (ROI) than the interest that was
charged on the paid-off loans. It’s very worth it.
When investing, it’s very important to do it responsibly. You don’t want to sink your money into
a single investment, cross your fingers, and hope it doesn’t fail. It is best to diversify your
investment portfolio. That way, an investment that fails can be offset by the investments that
Yes, investing is a gamble, but you can determine how much of a risk you are willing to take.
This can be best managed with a financial advisor. A portfolio that is professionally managed is
one that is properly watched.
When you have a financial advisor helping you, informed decisions can be made. If you know
absolutely nothing about investing, this is the best route to take. If you know something about
investing, then there are reputable companies that allow you to manage your portfolio online.
When you decide to manage your own portfolio, you should work hard ensure everything goes
according to plan. You have to measure risk by researching fund or stock performance and so on.
Fortunately, investment sites give you a lot of tools to help you through your endeavor.
Just make sure you don’t put all your eggs in one basket. There are different investments you can
make. You can invest in stocks, mutual funds, mortgages, real estate, and much more.
There are also some risky investments that are more high-risk, high-reward. A penny stock is an
example of this type of investment. These stocks are priced extremely low to start, hence the
name penny stock, but have a good chance of failing. You can buy many shares and make a lot
of money if they grow.
Lastly, you want to make sure you put money into a retirement account. IRAs, for example,
require investment to grow. You can determine the amount of risk you want to take. Only do
what you feel comfortable with. However, higher risk means the money can grow at a greater
rate. Unfortunately, it also means there is a higher risk of seeing a major loss.
Some of the greatest investors of all time took huge risks, but that’s because they could afford to
take the losses.
Invest for Your Future
I wish I knew a long time ago what I know about investing now and how it’s possible to pay off
debt and invest. The good thing is that I learned about it and can pass on the advice so that others
that are looking to achieve big things know what I didn’t. I have found investing to be a very
exciting opportunity that I will definitely teach my children about someday so they can make the
right decisions for themselves.
Jacob talks about a variety of personal finance topics at his blog, Dollar Diligence. You can find
him on Twitter @DollarDiligence.