Easy Payoff with Simple Upgrades

Are you tired of the long-term, hard work of a career? Too many people are. There are plenty of jobs out there that offer quick and simple payoffs for very little effort, with the chance for bigger payoffs down the line. But let's say you've got your sights set on something more lucrative and prestigious: would you be willing to give up all of that for a little peace of mind?

There's no need to go so extreme as to leave everything behind; in order to keep your head above water using this approach, it may be helpful just to find an easy payoff instead. But some people are willing to sacrifice a bit more than others. Sure, passive income is great if it's available, but paying down debt can give you more peace of mind than taking on a bunch of new debt and having your retirement savings wiped out. Almost all of us, though, will happily choose to do something else when faced with tough trade-offs like these--and that's why we have markets.

So let's look at the basic math behind things:

Let's say you have a $100k income and $20k in debt (and two small kids). You're lucky if you have $10k in retirement savings.

It's time to diversify your income. Do you have any additional side hustles or skills that can net you an extra $10k per year? Or do you want to go for a more aggressive approach and cut expenses until you've hit that target?

It's not easy to make a big change, but it is possible. And getting rid of debt and liability while increasing your chances of success is going to be just as rewarding as any risky bet. If you give up some short-term gain, chances are that long-term gain will be even bigger--after all, the stock market isn't static:

http://www.businessinsider.com/stock-market-charts-2016-2

If you don't have the income to pay your debt, you need to find a way to increase your income. And if you have the income, it would probably be wise not to add more debt in the form of additional payments if you're already up against a wall.

But for those who aren't up against that wall, maybe this is an opportunity for higher returns: find a simple payoff with some risk and some reward, and get rid of your debt in the process.  Do your due diligence, of course: don't invest in anything without understanding how it works, but you may have the opportunity to get a quick and simple payoff by trading in some of your debt for a new financial instrument.  While this might not be an ideal long-term strategy, there's certainly enough risk involved that it would be worthwhile to make sure you're getting into something that's worth it.  And with the right approach, this could accelerate your wealth accumulation even further.

But are you willing to give up a lot of money in the short term just to increase your chances of long-term success? If so, now is probably the time:

http://www.huffingtonpost.com/2011/10/17/10-things-you-really-should_n_1009361.html

If you go through with this plan, be sure to check out the other posts in this series. This post is one of a series on the stock market and your personal finances, so I'll have more to say on that topic in the near future.  But for now, I'm going to focus on another strategy: getting rid of debt and increasing your chances of long-term success using some fairly simple methods.

What do you really need? The concept is pretty simple once you understand it:You're not going to make smart financial decisions if you don't understand what it is that you actually need .  It's tempting to get caught up in the things you don't need and the things you want.  If you're like most people, though, these luxuries take up most of your life--and when push comes to shove, that's probably not a good plan.

What do you truly need in order to survive? Food, water, oxygen...these things are essentials.  Beyond that? Shelter and clothing are pretty basic necessities as well.  Other people might argue that entertainment is necessary or intellectual stimulation is necessary--but it really boils down to this: these are things we want, not actual needs.

So if you're in debt, it's worthwhile to look at your finances and see if you can free up some money.  Maybe you can fall back on your savings for a while? Maybe you can take a part-time job in addition to your full-time job?  Maybe you need to learn how to negotiate and lower your bills, or find new ways of making extra money?  Find an easy payoff with a quick return on investment that will help get rid of that debt!

Don't get more credit card debt. I know this sounds really obvious, but there are plenty of people who buy things they don't need with the promise of paying them later...and it never happens.  However, you might not realize that your credit cards aren't the best way to manage your debts.  If you have a lot of credit card debt and some time before you have to pay it off, look into:

http://www.thebalance.com/smart-way-handle-credit-card-debts-268496

http://www.forbes.com/sites/cecilymacdonald/2013/09/10/5-ways-to-repair-your-credit-card-debts/#53ff7c321b94

http://www.forbes.com/sites/cecilymacdonald/2013/07/22/how-to-fix-yourself-uprighted/#37f634e3d3ea

This list is short, but it's full of useful information.

Conclusion So here are our two simple strategies: find an easy payoff that will get you out of debt, or increase your odds of success in the long term.  Don't trade your debt for more debt! Just because you have the money, it doesn't mean it's worth it in the long term.  And even if all you do is manage to get rid of some of your debts, that's still a good thing--so don't underestimate the power of this idea.  If you're looking for a way to invest and make some extra money, be careful about using credit cards as a quick and easy payoff for extra spending money when what you really need is more income.