The enduring George Clason said, “Money is plentiful for those who understand the simple laws which govern its acquisition.” Interested in being one of those who understand the simple laws? These tips might help.
One of the largest mistakes people make when it comes to acquiring wealth is they think that it takes a large amount to get started. Some of the wealthiest people in the world have lived the traditional Horatio Alger story. They’ve started with very little and gone on to have more than they could have ever imagined. You don’t need a thousand dollars at a time to make smart investments. Invest what you can wisely, and it will grow over time.
Your savings can truly add up. You’ve seen how quickly twenty bucks here and forty bucks there destroys your checking account, imagine how quickly moving those little purchases into cash that you put in your savings account might add up. Even if it’s only a little money here or there, save it. If it’s an option for you at work, have your employer take some savings out of your check each month. You might not miss what never arrives in your primary banking account.
If you’re earning interest on your debts, it might be best to invest that extra cash rather than pay off your debts. Things like mortgages and student loans offer tax-deductible interest, and in some cases, it actually earns you more money to continue paying the debt and invest the cash that you would have spent repaying the debt in full than it does to just repay the debt.
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Hi Brad,
Great post, but I have an issue with the last paragraph. Mortgages do accrue benefits at tax time. However, most investments that I know of incur taxes as well, so the calculation needs to be done very carefully to ensure that you are not actually paying more by ’saving’ that cash rather than paying off the loan.
You are only getting back 28 cents (average) on every dollar of interest you are paying to the loan company – I can’t remember the math, but it doesn’t make financial sense to continue to get tax ‘benefits’ if you can find a way to pay it off more quickly.
Also, the interest amount on a loan will be a much bigger proportion of the repayment amount at the start. If you make extra payments you will be reducing the principal faster, reducing your overall interest burden.
Added to which, it is easier to increase the regular payment on a loan than to remember to make one-off payments. Also, if you increase that payment, you will be less likely to spend the savings on something ‘urgent’ that pops up.
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