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Maybe thats why youve likely postponed it up until now.
How do you get started?
What are the basics?
Thankfully, experts understand the challenge and are ready to break it down for you.
To quote Albert Einstein, Compound interest is the eighth wonder of the world.
He who understands it, earns it.
He who doesnt, pays it.
Typically, one should pay down the highest interest rate debt first, he said.
And that is generally high interest rate credit card debt.
Understand Not All Debt Is Bad
Not all debt is bad, Johnson said.
Some experts would contend that student loans are bad debt, but I disagree.
I would categorize modest student loan debt as being good debt.
In his opinion, student loans get a bad rap.
Mortgage debt also can be considered good debt.
Johnson cautioned against comparing mortgage interest against investment interest, because mortgage interest is tax deductible.
He offered up a formula to determine whether it makes more sense to pay down the mortgage or invest.
Specifically, one should not simply budget and track expenses, but one should budget for savings.
Do not save what is left after spending; instead, spend what is left after saving.'
It should be a line item on your budget, Johnson said.
You dont successfully build wealth by simply taking what you have left after all your expenses.
We accomplish what we prioritize.
Prioritize savings and invest those savings.
Because of compounding, time is the greatest advantage of investing, he said.
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