It must resonate with you to think that when you keep yourself from paying the interest on a debt, you are indeed: making money. Of course this is not money you can withdraw and spend, but rather future savings: an investment.
A lot of people who invest money would like to see a good return over the life of an investment. Let's say an average return on a moderate mutual fund over a 20 year span has returned 10%. The average Credit Card interest rate is 12.99%. Are you beginning to see where I'm going?
A major concern for many is the issue of risk and return on investment. The debt you have is guaranteed to have an interest rate and hence a definable risk and return, however the investment will have no such guarantee.
A large issue with investing in anything is the lack of knowledge the investor has about the investment. We can agree that paying off a mortgage debt quickly can have huge benefits. Much like a stock which makes huge daily gains.
So now we are coming to a highly important point. Having an investment make huge gains is much like paying off debt quickly. The question remains, how do we as people in debt, pay off our debts at an accelerated pace?
There are 3 ways to do this. One is to decrease the term on the debt, which will increase the payments, another is to decrease the interest rate on the debt, and the final way is to increase the payment amounts and the activity.
When you are taught how to use existing lines of credit to leverage your debt, you will then be in a position to accelerate your debt payoff. We have demonstrated in this article that paying off your debt is a brilliant way to invest your money.
