Paying off debt is prevalent in our society today. From those who are burdened with student loan debt to those dealing with paying down credit card balances, debt is seemingly everywhere. Having been through my own personal debt payoff journey I know firsthand the work and sacrifice that goes into becoming debt free.
The freedom that comes out of it though is great, but the problem is that little is said of what you should do after the debt is paid off.
Paying Off Debt is Good, But Focus Can Be Lost
It took me nearly five years to pay off my credit card debt and several more years to pay off my student loans. Looking back at my debt payoff days, I was committed to doing all I legally could to get the debt paid off. I sold items I didn’t use, donated plasma (a bit sketchy I know, but it was cash) and sacrificed. Those are all great ways to work at paying off debt, but there is one underlying problem in that – focus can be lost towards the overall financial picture of growing your wealth.
There is a regular debate over whether you should invest in the stock market or pay off debt first and that’s not really the point of this post, other than to point out that many take the pay off debt first option and are lost as to what to do with their money when they’re done paying off debt.
Take it from someone who went through it himself, it does happen. My encouragement to you if you’re still paying off debt and have chosen to focus on that is to educate yourself on investing now so you can hit the ground running once you’re done paying off any unsecured loans you may have as a result of the debt.
You Want to Grow Your Net Worth
Now that you’re done paying off debt, the key should be on increasing your net worth and doing so now. I realize this can be easier said than done, but it should be your focus. How can you start increasing your net worth? Of course, there are a number of way you can do this, but your activities should include some of the following:
- Investing in the stock market
- Making additional income on the side
- Cutting expenses
You likely were already cutting down expenses as you were paying off debt, as well as making side income. If you were, great! The nice thing about doing it now is that it’ll have a positive impact on your net worth. Don’t just stop at these two items though, but also start investing in the stock market and better yet start building a retirement portfolio.
If you’ve not had the time to educate yourself on investing, make it simpler on yourself by investing in some solid, low-cost index funds and let them do the heavy lifting for you. Taken together, all three of these practices are a well-rounded way to help make you more money and put your focus on the future.
Your Mindset is the Key
Increasing your net worth can be easier said than done many times, but what it ultimately comes down to is changing your mindset. While paying off debt it can be easy to get sucked into the vacuum that involves doing only that. Now that you’re debt free, you need to broaden your perspective and put your eyes on the bigger picture. Growing your money isn’t going to happen overnight and it is going to take a variety of methods to realize positive net growth.
There are many things you can do to start to grow your money now, like teaching yourself something new and monetizing it, automating your saving and investing so it’s not overlooked, and giving yourself quantifiable goals to reach. That said, changing your mindset to one that’s focused on increasing net worth is likely the best and most important aspect to focus on as it’ll set you up for the success needed for long term wealth accumulation.
What wealth improving challenges did you face as you were paying off debt? What monetizable skills would you like to learn?
Photo courtesy of: Lending Memo