When taking on debt, even though it may result in increased assets, your net wealth decreases. This means that debt in general is a KILLER to building long-term wealth, right? Well…let’s reframe that.
When you take action, debt can become an asset.
Paying Off Debt = Investment in Yourself
When you start to take action on paying off debt, you are turning that debt into an investment. It is basically investing in yourself and in your long-term wealth. You are putting your money into your overall financial success.
The debt I’m referring to are things like credit card debts with super high interest rates, medical debts that accruing interest and penalties, personal loans that have high interest and aren’t secured by anything…the debts that aren’t bringing you any long-term financial benefits.
You may want to get on a pather of becoming 100% debt-free, including your home. However, think of your home as an investment in yourself and your path to financial success. Even with a mortgage, a house can be a great investment.
But for now, let’s focus on that debt that is not helping you create long-term wealth right now.
If paying for debt seems impossible for you, don’t give up on the idea. When you take consistent action, you will see that it can be done without sacrificing every inch of fun in your life until you are absolutely debt-free.
Make an Inventory of Your Debt
To get started you need to take inventory of your debt. This can be scary to see everything you owe laid out bare, but it’s ok. You can’t start crushing this debt until you know your starting point. There is no shame in it.
Today is the day you take a step towards change and stop adding to it.
Make a list of all debts. A spreadsheet or google sheet is a really great way to do this. I want you to list out the outstanding balance, the interest rate, and the minimum monthly payment.
Create a Plan to Invest In Your Debt
Next, create a plan of attack to pay off these debts. How will you invest in yourself, not add to the debt, and actually lower your liabilities?
There are some great methods out there like the debt snowball by Dave Ramsey or even the “Dead on Last Payment”.
Choose a method that works best for you based on your type of debt and then get to work!!!
The idea is that you focus on one debt at a time and once the first debt is paid off, you move on to the next, all the while you are paying the minimum amount on the other debts.
Change Your Mindset About Your Debt
As business owners, we work hard for every dollar we make. Paying off debt can feel like making money just see it washed away into debts that aren’t bringing you any benefit.
But you see, that’s the thing! Having those debts hanging over your head is not helping your long-term wealth-building at all! And, by paying off these debts you are investing in YOURSELF!!
Every dollar you pay off, every debt you wash away is making progress in your long-term financial success.
Think about it this way, when you make a dollar and have high-interest, never-ending debts, a portion of every dollar you worked so hard to make is already spoken for by those debts.
It’s time you create a plan to keep more of that hard-earned money. When you invest in yourself to pay off debts, more of every dollar you make is yours.
Of course, we will then move on to investing those profits into your long-term wealth by creating emergency funds, retirement plans, paying off the home, investing in your business, and even more!!!
Learn More Ways To Invest In Yourself
I know you can tell I’m passionate about helping entrepreneurs succeed. You love what you do and you work HARD. You give freely of your time and talents and you’re proud of what you’ve built.
BUT….too often something doesn’t seem quite right. You still worry about your finances, you still aren’t paying yourself enough. You’re still not even really sure if you are making enough money for your business to be sustainable long-term.
It’s time to master your finances and stop running on the hamster wheel of financial burnout.
I want to help you to master your finances without all the accounting mumbo-jumbo that makes your head spin. I am offering a free workshop to teach busy entrepreneurs about money mindset, your personal finances, your business finances, and the steps you can take to finally achieve all of your goals!