Most people are focused on debt -- getting out of it -- and forget about creating new wealth. Why? It doesn't make sense. If you don't have enough money, the goal should be to make more. Not limit your life based on the debt you owe. The Cash Machine is about expanding your life, not scrimping and saving. It's about making money first and managing your debt second. - Loral Langemeier
Do you agree with the quote above? In a oddball way, I agree (to some extent). I rather expand my money than to live like a cave woman. I would not put managing debt second. I would make both a priority.
Invest, save, add more income streams and at the same time knock out debt. Yes, it can be done. You can invest in retirement and get out of debt at the same time. Some experts say get out of debt first and then invest in 401k. I say no. Play both ends. I do not know any blogger that did this method. Most continue to doth both ( invest money and pay down debt) If you see net worth statements, you will see balances on both sides. Some debt and some assets. But, as in the personal finance world with everything else, do what works for you.
10 cool comments:
This sounds like tick for tack!
I have did both, focus on debt first. Focus on debt second.
I lost money both ways. By putting debt first I lost the 401k match
By focusing on debt second. I began paying fees.
If I learned anything from this, pay yourself first regardless of your situation. Look out for yourself
I can speak from experience, Focus on increasing your income.
When you focus on getting out of debt. More emergencies and hiccups will come along the way. And you will always defer your goal. When you pay yourself, you will make money regardless. Focus on getting that promotion while you are getting out of debt.
Keep paying your bills but also search for a better job or a side business.
I say do both. I make sure to pay down as much of my debt as possible, while still funding my 403B so I can get a match. Then the light bulb went off, and I got a part-time job. Doing both is a good mix. Right now am not incurring any new debt, credit card balances are going down, and my 403B has over 7gs in it.
I don't think you should have to choose between your goals. Maybe prioritize between the goals, but certainly not sacrifice one for another.
Exactly, I know experts like Dave Ramsey say pay your debts first and then contribute to 401k. But I disagree.
Some people focus so much on debt that forget to save. The debt tend to control they lives.
I do both. I put enough into my 401(k) to get the company match and I put everything else to debt. No credit cards so it's going towards paying off the cars and then student loans. For quite awhile I was buying ETFs that paid monthly income as well (mostly bonds), but with the recent market turmoil I've stopped that and am concentrating on debt.
You have to do both. Because like Ricardo's law of wages, expenses will just increase with rising income. If you don't get a grip on the debt, you'll just keep overspending as you make more.
I'm like you, I agree (to some extent). While it's important to focus on debt reduction, one must also increase income - AT THE SAME TIME.
For years, I lived in a debt cycle. I'd pay off a little, increase a little, pay off a little more, increase a little more. I was paying off debt but never seemed to make any progress because "something" always came up that resulted in more debt. So for years, I chipped away at it slowly which was discouraging.
When my income increased, I was finally able to make huge dents in my debt. Not only that, I no longer had to rely on debt instruments in an emergency because I had more CASH available. If it were not for the higher income, I'd still be living in that never ending debt cycle.
I think it is wise to do both. Invest a little in retirement and pay down those debts! To see those assets rise keeps you motivated to get rid of more of your debt and to stay on track - or at least it does for me!
Doesn't the problem arise that for most Americans - the more money they make, the more they spend? Not to mention the more taxes you pay on your additional income.
Some experts push you to pay down (although that is good) most people tend to forget about other things that are financial. Yoiu should always be well balance.
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