One of my “Cashflownaire Members” recently sent this question:
“If you have limited dolla dolla billz and had to make one priority, would you invest or pay down debt?”
This is a great question, isn’t it?
We all have limited dolla, dolla, billz and this question forces us to think strategically.
Which opportunity offers the most leverage: investing or debt reduction?
The best way to answer this would be to start with your ultimate goal and then work backwards to find your answer.
If your goal is to eliminate your need to work for $$$, will paying off all of your debt accomplish this goal?
No, it will not eliminate your need to work because you’ll still have ongoing living expenses including (716) different taxes, various utilities, several insurance premiums and transportation related costs.
Debt freedom is amazing but it does not eliminate your need for monthly cashflow.
This is why the first step in our Cashflownaire Plan is to build monthly cashflow streams. You can then use this extra cashflow to pay off your debt. 🙂
When you’ve paid off all of your debt using this approach, you’ll never have to worry about dolla, dolla, billz again because you’ll be in the glorious Position of F – You.
In fact, here’s the strategy I suggest:
Acquire specific income-producing assets to pay off specific debts.
Asset #1 – Makes Automated Principal Payments on Debt #1
Asset #2 – Makes Automated Extra Principal Payments on Debt #2
Asset #3 – Makes Automated Principal Payments on Debt #3
Allocate every dolla of cashflow from each specific asset towards each specific loan.
this approach, you’d be using your dollas to buy new income-producing
assets. You’d then use the asset’s dollas to pay down your debt.
When each loan is paid off, you’ll still own each income-producing asset! 🙂
Even better, this approach locks in a guaranteed return on your asset’s cashflow. Paying down debt is the SAFEST investment you can make. Each dolla of debt you eliminate reduces your overall financial risk.
Use these accelerated cashflow Systems to acquire the best income-producing assets.
Once these new assets are pumping cashflow, set up automatic extra principal payments and you’ll be on your way to debt freedom!
P.S. There’s another important reason to use this approach to paying off debt…
Making extra principal payments isn’t very exciting. It requires massive discipline because you don’t “feel” any real benefit until the debt is completely eliminated. 🙁
This approach allows you to sidestep this challenge because your focus is on acquiring new-income producing assets, which is extremely rewarding.