Paying off debt successfully requires a lot of determination and hard work, oftentimes at the expense of other financial goals. This can push back your goal of saving for retirement and investing to build wealth. As someone that’s dealing with the plight of student loans, I have neglected many other financial priorities in hopes of being debt free sooner.
Debt and Loans
In today's economy having debt is socially acceptable, but using our resources you can determine how to properly manage debt, and find ways to eliminate it, so you can build wealth for the future.
The economy is definitely better than it was a few years ago, but let’s be honest — it’s not really that good. That’s especially true if you are a recent college graduate trying to navigate your way into the job market, and carrying a big load of student debt in your backpack. How can you payoff student loans in this economy, especially given more limited employment opportunities?
The cost of a college education has exploded to the point where using student loan debt to pay at least part of the cost has practically become a given. But even if student loan debt is a default choice, it’s still one that is best avoided or at least minimized.
Managing the trifecta of student loan repayment, building savings and retirement planning can be overwhelming. The money you owe and the money you need for the future can blur together in a cloud of daunting numbers and competing priorities.
Leveraging debt for investments is a strategy that gets popular during multiyear bull markets. And there’s no question — on the way up, borrowing to expand an investment portfolio can work wonders, but we should never forget that what goes up, must come down. When it comes to investing, leverage is a double-edged sword — it magnifies movements both up and down.
A strong credit profile isn’t a form of wealth, but it is definitely a tool that will help you get there. Though we mostly think of a strong credit profile as an advantage when it comes to borrowing money – lower interest rates, better terms, etc – it actually goes way beyond credit.
Many financial people – perhaps even most – recommend that you get out of debt as soon as possible, and stay out of it for ever and ever. But is this always the best advice?
A lot of the time, the debate about debt revolves around whether debt is “good” or “bad” — or whether debt is just debt, and can’t be classified in positive or negative terms. What the debate really comes down to, though, is whether or not the debt is socially acceptable.
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