In this digital age, there’s a near-endless stream of advice around financial strategy and security. The growing “noise” makes it increasingly difficult to be selective about what strategies you’ll follow to positively impact your overall financial strategy, which can result in two responses: freeze and fear.
That’s why the team at Money Insights is committed to debunking common financial myths you’ll discover as you work to boost your net worth. Below, we’re covering three damaging myths around your debt management strategy and uncovering more constructive alternatives to implement in your current financial strategy.
Myth #1: Debt isn’t a tool and only serves to hold you back financially.
You’ll hear this one from prominent financial analyst Dave Ramsay, among others who believe that debt cannot act as a tool in any circumstance. This simply isn’t accurate and can limit your ability to scale your net worth if you choose to follow that belief. The key to avoiding the pitfalls of debt is to have a strategic management system in place that identifies the type of debt you have accrued (whether good or bad), as well as the overall quantity and ratio of good vs. bad debt.
After you’re armed with the facts, determining the risk and reward is a simple process that can show you if any investment of choice is worth the risk.
Myth #2: Lifetime risk that comes from debt can destroy perceived returns or benefit
This belief is a classic example of all-or-nothing thinking that can wind up limiting your benefit and ability to grow financially. While this can be the case in extreme situations, basic risk management techniques can help you avoid financial catastrophe. Leverage can help you to grow and enhance your ability to manage your debt, turning into a positive feedback loop of financial security.
Myth #3: Don’t invest in real estate unless you can pay for the property in cash
While this does seem like a good choice to make for your financial and investment strategy, it isn’t always the best option. Committing to a cash-only purchase plan limits your liquidity that you could have, as well as any of the leverage that your mortgage would give you for future investments. This, especially in certain markets, can be extremely detrimental to your financial wellness.
Get clarity for your financial future with Money Insights
The team at Money Insights is committed to your financial success. We offer tailored financial strategies designed to help you to move from a place of high income to high net worth. For more information, please connect with us today. Our experts look forward to speaking with you!