• Skip to main content
  • Skip to secondary menu
  • Skip to primary sidebar
  • Skip to footer
Dinks Finance

Dinks Finance

Personal Finance By and For Couples

  • Facebook
  • Pinterest
  • RSS
  • Twitter
  • Smart or Selfish
  • Couples Finance
  • Make Extra Money
  • Build Wealth
  • Blogroll
  • About

Rough Times: Pay Off Your Debts

February 22, 2021 by James Hendrickson Leave a Comment

pay off your debtsIf you’re like us DINKs, you’re probably wondering how to improve your financial bottom line. The recent covid related economic slowdown has torpedoed some people budgets, so some options for seeing immediate gains to one’s net worth are limited.

One way to immediately improve your bottom line is to pay off your debts. There are several advantages in doing so.

First, paying off debt improves your cash flow. Every dollar that’s borrowed usually costs you to carry the debt. Right, so if you owe 100 dollars at 6 percent annually, it costs you 6 bucks to carry the debt every year. Well, if you pay off the $100, then your budget has an additional 6 dollars more. Run some real numbers to see if what I’m saying makes sense.

Get your FREE trial of Simplifi by Quicken. You work hard for your money. Now let’s make it work hard for you.


Second, paying off debt improves your net worth. For example, let’s say you have a mortgage worth $100,000, but you own $80,000 on your house. Your networth, all things being equal, would be $20,000 (i.e. $100,000 – $80,000 = $20,000). But, if you spend some time and aggressively pay down $10,000 on your mortgage, then your net worth is now $30,000. This is only natural, when pay down debt your net worth, and accordingly your ability to build wealth increases dramatically.

There are some tax issues with interest deductibility, but basically the first two points hold true.

Third, debt reduction is risk free. You incur absolutely no market risk, systemic risk, or other kinds of risk if you pay off debt. Every dollar you pay off is a dollar more towards your net worth, and a dollar that improves your cash flow – all at no risk to you. This is a contrast to stocks, bonds, cryptocurrency & starting a business or any of the other typical means that people use to improve their net worth.

In terms of the mechanics of making this happen, here are some practical tips on getting extra money to pay off your debt, as well as an example of how its done.

For more wealth building awesomeness, read these:

Getting ahead on $600 per month

Don’t Forget The Basics

Save, Invest And Reinvest To Build Wealth

Personal Finance Advice from 1758

James Hendrickson

James Hendrickson is an internet entrepreneur, blogging junky, hunter and personal finance geek. When he’s not lurking in coffee shops in Portland, Oregon, you’ll find him in the Pacific Northwest’s great outdoors. James has a masters degree in Sociology from the University of Maryland at College Park and a Bachelors degree on Sociology from Earlham College. He loves individual stocks, bonds and precious metals.

Filed Under: Debt, How we do it Tagged With: building wealth, Debt, debt mistakes, lower debt, Net Worth, optimize debt, reduce debt, Spousal Debt, wealth

Reader Interactions

Leave a Reply

Your email address will not be published. Required fields are marked *

Primary Sidebar

 

 

Couples Finance

  • What Dave Ramsey’s Take On marriage Is Missing
  • Tips For Newly Married Couples
  • Getting Together, Getting Hitched
  • Prenup Basics
  • Manage Your Money Together

Great Finance Blogs

  • My Stock Market Basics
  • Cafe Credit
  • Clever Dude
  • Modest Money
  • Mighty Bargain Hunter
  • Frugal Rules
  • Young Adult Money
  • Money Talks News
  • Saving Advice
  • Peer Finance 101
  >> Our *entire* blogroll

Companies Supporting The DINKS

Please consider visiting our gracious supporters:

7binaryoptions.com: Your one stop information source for trading binary options.

Get the Latest Coupon and Discount Codes at Freecouponcodes.net.

The best cheap web traffic that comes in handy for your website traffic needs.

Shop till you drop and discounted offers with Shopee promo codes.

Compare business electricity prices at utilitysavingexpert.com

cheap shopping online at DHgate.com

Footer

Get Started

  • Make Money As An Amateur Photographer
  • The Pros and Cons Of Mutual Funds
  • Building Wealth On $600 A Month
  • Yes, You can Buy An Oil Well
  • Kimball Musk’s Net Worth
  • Nine Ways To Make Extra Money

Explore

  • Home
  • About Us
  • Contact Us
  • Facebook
  • Pinterest
  • RSS
  • Twitter

COPYRIGHT © 2020 Dual Income No Kids DinksFinance.com is a District Media site.