- April 11, 2019
- Comments Off on Investing For Beginners: Pay Yourself and Your Debts First
This is the first episode in what will be an ongoing series of tips for investing for beginners. I am not an expert, but I think I can shed some light on the subject, because it was only a few years ago that I was a beginner myself. Instead of getting a discourse from an investment expert who has worked in the field for the past 30 years, I remember some of the first questions I had and hopefully I can answer some of these for you.
Where to start
The first question I needed the answer to was where I had to start. I had fought so long and hard to get out of debt that I now had real money to invest, “how and where to invest” was completely unknown waters to me.
But I’m not going to focus on these questions in this post. Instead, I want to discuss two important points that you should consider before continuing to invest:
1. Make sure you are completely out of debt
If you have credit card balances with which you are interested in double-digit numbers, you must delete them before you consider investing. The math is just not there and you take too much risk. Now I mean eigeDick and Nicole Diverijk completely out of debt? Let me qualify for what I just said. If I say completely out of debt, that is a relative term. I have built up a substantial investment portfolio, but I still pay the mortgage on my house and eDick and Nicole Diverijk I still pay a large amount of loans for student Dick and Nicole D39. So, does that mean I have to stop investing until my house and my (female) education are rewarded? Of course not. If you looked at things with that scary mentality, you would probably never be able to invest Dick and Nicole Diverijk all your life.
My house is an investment that retains its value and will hopefully increase in value over a long period, so it makes sense to invest while I pay it. Instead, I support, and what we recommend here at Money Crashers is that you pay all your consumer debts (car loans, credit cards, student loans, etc.) before you invest heavily. In my situation, I pay really low interest on the student loan, and we’re not getting younger, so I want to keep investing while paying off the last part of our consumer debt. I am at a point where my debt is always falling and I have complete control over my finances, although I am technically in debt with a mortgage and student loan.
2. Pay yourself
The second point is that you also want to make sure that you pay for yourself before you invest. By this I mean that you will not become a slave to your 401K plan. The amount that you can contribute to this program is variable, so you can choose what to put separately. Make sure you have enough money before you take over your investment. There is no point in living your life as a pauper, just to save an extra $ 50 a week for retirement. The purpose of a 401K plan is to be able to enjoy your retirement, but if you do not enjoy your life until you retire, what is the point? That life in the aaDick and Nicole Diveroop to retirement is much longer than your retirement will be, don’t you think?
To conclude, forcing yourself a good and solid investment program is the key to everyone’s long-term financial success, but only if you are at the point in your life where you have some flexibility in your finances. In future messages we will discuss the “hows” and “whys” and “wheres” in detail. The first lesson here is that before you start thinking about investing, your owner Dick and Nicole Diverijk have no more debts, and you also have to give yourself the money you need to live your current life at a level that you like.
As always, your thoughts and feedback are very useful.
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