Investing
Don’t Invest In Yourself Until You’re Debt Free
I’m a bit of a social media junkie. That is to say, my Twitter feed is more alive and buzzing than a bee hive. My Twitter feed is completely devoted to personal finance so that I can keep on top of new developments within the industry and bring you the latest information possible.
I also have one off people in my stream primarily devoted to entrepreneurship because, as you know, I believe that a small business can be the key to financial success. Anyway, one such individual who I follow is Mark Cuban. For those of you unfamiliar, Mark is an American businessman and investor who owns the Dallas Mavericks and a host of small companies. He also appears on the show Shark Tank as a shark investor.
The other day I bumped into this tweet from Mark Cuban that I felt the need to talk about.
https://twitter.com/mcuban/status/492019723207331840
Don’t invest in yourself until you’re out of debt?! I felt the need to tell Mark that he was wrong because, you know, he was! That’s not to say that CNBC is where everyone should head to for financial advice either.
Does anyone out there have a student loan? Average balances are heading towards as of this year. It will take the average person with student loan debt 10 years to repay that amount. So, hypothetically, you leave school at 22 with this debt and you’re not free of that debt until you’re 32…and that’s just student loans. So you won’t start saving until you’re 32 years old. What a waste of time and compounded interest.
Seriously though, if you’re waiting until you’re out of debt to save, even a little, like in let’s say a 401(k) plan, you are wasting years worth of progress that you could have made. Let’s use me as an example. I’m not even going to go back 10 years. I’m just going back about 5. In the time that I have had this blog I’ve gone from having just a massive debt and owning nothing to owning 2 rental homes (one outright) and a retirement portfolio that was about $40K to one that keeps hitting 6 figures and then falling back depending on how the stock market is doing that day. That’s in 6 years. Inhale that for a moment.
Could I have repaid my debt? Hell yes, but had I devoted 100% of my income to debt servicing, I would not have been able to take advantage of the great deals that I got with the rental properties that has contributed to an increase in my net worth and added a second income stream. Investing in myself while servicing my debt was the smartest thing that I could have done because it has put me on a path that will help me for a lifetime.
Now, in Mark’s defense, he might be referring to investing in the stock market and forgoing debt servicing at all. Clearly, any idiot with a brain knows better than to do that, but do keep in mind that even the mutual funds in your retirement accounts have investments in the stock market.
Bad advice can happen to good people. Don’t fall for it.
