One of the most effective ways to reach your wealth management goals is to limit – better yet, eliminate – your revolving debt. Any money that you’re currently contributing to paying off mounting credit card bills could instead be leveraged to enhance your investing efforts! Just think about how much you’ll save on your interest rate alone, for just about everyone – that’s a guaranteed double-digit gain! If that’s not a good investment, what is? Let’s consider ways in which revolving debt is holding you back from building wealth.
Inflated Interest Rates
Revolving debt doesn’t just include the stack of credit cards in your wallet, it includes a range of debts that all carry inflated interest rates. Open-ended accounts like personal lines of credit and home equity lines of credit are also considered to be revolving debt.
It’s High Risk
When you have high levels of revolving debt, you’re opening yourself up to more risk than necessary. If you were to unexpectedly lose your job, would you be in a position to be able to pay your credit card bills, and your other bills? Have you considered this level of risk before and how it might be contributing to your stress levels?
Does your revolving debt keep you up at night? Think about the power of eliminating this stress entirely. You could focus your newfound energy on the things that are truly important to you, and redirect all of that money to travel, investing, or activities that you value!
Consider whether buckling down and paying off your revolving debt will help your wealth building strategy. What would you do with all of that cash flow once all of your debt is paid off?