How to Turn Debt Into Wealth

In troubled economic times, more people than ever are looking to pay off debt and create wealth. What most are lacking is a plan. Following these steps can help you achieve both. Read on to learn how to turn your debt into wealth.

Instructions

1

Total up all of your outstanding debt. Also tally up your monthly debt payments. Include car loans, student loans, credit card debt, and personal loans. Also include second mortgages, home equity loans and home equity lines of credit. Depending on your goals, you may also want to include your first mortgage as well.

2

Once you have a total of your monthly payment amounts, determine if you can add anything extra to pay toward debt each month.

3

Create an order of how you want to pay off your debts. You can order them by interest rates, size of the debt, or any other method that works for you. Different experts have different advice on what order to pay off debts, but the method you choose is not nearly as important as choosing an order and committing to it.

4

Begin paying off debt by paying the minimums on each debt each month, and apply any extra to the first debt on your list. Continue to do this until the first debt has been paid off.

5

Once the first debt has been paid off, start with the next debt. It is important, however, that you do not reduce your total monthly payment amount by the debt that has just been paid off. Roll the payment amount from the debt you just paid off right into the next debt.

6

Continue repeating steps four and five as your work your way through your debts. Depending on the amount of your debt, this could take time. Do whatever is necessary to remain focused through this step.

7

Once your debts have been paid off, you can take the monthly amount of the payments you no longer have and direct them toward creating wealth. A great, simple way to do this is to take the monthly amount and invest it into diversified mutual funds using dollar cost averaging. A diversified mutual fund strategy will spread your risk across several different categories of investments. Investing using dollar cost averaging ensures that you are buying a greater number of shares when costs are low and a higher number when costs are high.

8

You can continue to turn debt into weatlh by doing three things: 1.vowing never to borrow 2.increasing your monthly investment amount as your income grows and 3. continuing to educate yourself on different investment methods.