It's no secret that debt and financial anxiety can take a big toll on your mental and physical health. But the good news? There are ways to pay off debt and build wealth at the same time—and you don't have to choose between one or the other.
In this blog, we share some strategies for paying off debt while building wealth simultaneously. So if you're ready to hit the reset button on your finances, grab a pen and paper, and let's get started!
If you want to pay off debt and build wealth simultaneously, it all starts with creating a budget. To start, list all your income sources and monthly expenses. As you go through this process take note of any unnecessary expenses that you might have.
Read more: Everything You Need To Know About Budgeting
Once you have created a budget that takes into account your income and expenses, determine how much extra money you can put towards paying off debts each month. This amount should be enough to cover the minimum payments on any debts plus an amount to reduce the principal balance. By making a budget, cutting out unnecessary expenses, and allocating extra money towards debt payments each month, you can set yourself up for success on the path to reducing debt and building wealth at the same time.
When it comes to decreasing debt and increasing wealth, the first place to start is by paying off high-interest debt. These debts usually come in the form of credit cards, payday loans or other unsecured loans. The reason why you want to tackle these first is because of their double-digit interest rates—the longer you keep them around, the more interest you're paying.
It's best to have a plan in place when paying off your high-interest debt.
Here's how: Calculate how much money you can spare each month and begin throwing as much of that extra income towards your debt as possible. Make minimum payments on all other debts, while targeting the one with the highest interest rate. Once that's paid off, move onto the debt with the next highest rate and repeat until all of your high-interest debts are paid off. In addition to reducing the amount of interest you pay each month, this strategy also helps you stay focused since it encourages tackling one debt at a time rather than spreading your monthly payments over multiple bills.
Read more about How to Prioritize Your Financial Goals?
The best way to pay off debt and build wealth at the same time is to automate your payments. By doing so, you can make sure you're paying off all your bills on time and be sure that you don't miss any payments. Plus, when all of your payments are automated, you don't have to worry about forgetting something or having an unexpected bill show up at an inopportune time.
One way you can automate debt payments is by setting up automatic transfers from your bank account to creditors. This will ensure all of your bills will be paid on time and there won't be any forgotten or late payments that could potentially harm your credit score.You can also automate savings by setting up automatic transfers from your bank account into savings or investments accounts. This way, you'll be adding money to those accounts without even thinking about it and it will equip you with the funds necessary for saving and investing for future goals like retirement or college funds. Automating debt payment and savings will make both processes easier as well as contribute to better financial health overall — it's just another simple step towards paying off debt and building wealth simultaneously.
There are many ways to increase your income, from setting up a side hustle or online business to taking on extra part-time work or freelance gigs. You can also look into opportunities for giving seminars or teaching classes. Below are just a few ideas that can help you find some additional income:
A high-yield savings account typically offers higher interest rates than a regular savings account, which can mean you earn more money over time. Plus, with a high-yield savings account you don’t have to worry about having your funds locked up in an investment – you can withdraw your money at any time. You also don’t have to worry about additional fees or hidden charges when you open the account. Opening a high-yield savings account is an easy, efficient way to help pay off debt and build wealth concurrently—and without any extra effort on your part!
Read more about the Best High-Yield Online Savings Accounts of May 2023
Ready to dive into investing? You aren't alone—investing is one of the best ways to both pay off debt and build wealth simultaneously. A great place to start if you are not sure on how to enter the world of investing would be to talk with a financial planner on your financial goals and let them create a step by step strategy for you to follow.
Look no further than Vincere Wealth! Our expert team is dedicated to helping you achieve your financial goals through personalized, one-on-one consultations. With our free consultations, you'll have the opportunity to speak with a knowledgeable advisor who will guide you through the process of investing. And the best part? You can start with as little as $5!
When investing it is important to research as much as you can. For example, stocks, ETFs, and mutual funds, setting asset allocations so you're not overly weighted in any one sector or asset class, and reevaluating those allocations as needed are all important parts of managing your portfolio for maximum growth potential. When investing for the long term, it's important not to get too worried about short-term market fluctuations. The key is consistency—contribute regularly (even small amounts) into investments such as stocks and mutual funds that align with your goals for the future. Over time this contribution strategy will give you the opportunity to benefit from compounding returns—put simply: your money will be working smarter, not harder!
Paying off debt and building wealth doesn’t have to be an either/or decision. With the right approach, you can do both simultaneously. By creating a debt payoff plan and committing to sticking to it, you’re setting yourself up for success. With careful budgeting and diligent saving, you can pay off debt and build wealth all at once. Remember to track and adjust your progress, and keep in mind that it could take years to become debt-free. But with a little patience and a lot of discipline, you can have financial security and peace of mind.
Speak with an advisor at Vincere Wealth Management to get started on the journey of building your wealth and knocking that bad debt out of your life!
As Managing Partner of Vincere Wealth, Josh assists clients in navigating financial challenges and making sound financial decisions. Having someone guide you in making sensible financial decisions today can have a substantial impact on your future financial wellbeing. Josh takes great pride in guiding customers through the complexities of taxes, real estate, businesses, employer stock and international financial planning.
If you're interested in an investment advisory or financial planning relationship, schedule a FREE 1:1 session here to connect with a #VincereWealth Advisor.