How to dig yourself out of a mountain of debt
2 Proven Methods To Escape Debt For Good
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Weekly Market Update 🗒️💡
We have yet to see tech fully rebound from a scary year in 2022, but if you decided to buy during the tech sell-off, you’re sitting pretty right about now.
The NASDAQ rose by 2% this past week, notching its 6 straight weekly rally. Great sign for the tech-heavy index and those investing in it. This marks the longest stretch of rally’s since January 2020, just before all hell broke loose with COVID-19.
A strong jobs report was released for May which boosted stocks on Friday as well. Crazy what a little bit of market news can do to the value of your portfolio. Which is why I continue to preach the same thing over and over again:
Stop worrying about short-term fluctuations if you’re a long-term investor.
Last week we mentioned NVIDIA’s homerun earnings report, smashing expectations left and right. This acted as a catalyst for surging optimism around mega-cap tech. AI companies are growing at an alarming rate and the upward momentum is undeniable.
Notable mention:
Tesla (TSLA) led the charge last week with an 11% increase, which totals a 74% gain year to date.
In fact, Tesla and NVIDIA have helped push the NASDAQ up 27% in 2023. Leaving the S&P 500 and Dow Jones in the dust.
The index continues to be ~18% off its all-time high, but we may likely see it reach those levels again in 2023.
My take:
As a self-proclaimed dividend investor, I still invest in mega-cap tech. Surprise!
There’s no reason why you should just be a “dividend investor” or a “growth investor” or an “index fund investor”. You unlock a whole new world of building wealth when you dip your toes in a bunch of different buckets of water. Do it all, don’t limit yourself to only one thing.
Tweet of the Week
$61,063.
This is the average debt carried by Gen X’s according to a study from April 21 of this year. That’s more than the average annual salary.
Which is why I’m giving you 2 proven methods to escape debt, so you can then focus on building a secure financial future for yourself and your loved ones.
But first, you must understand what debt is…
Simply put, debt means borrowing money from a person or bank that you have to pay back later. It almost always comes with a fee. Credit providers charge a certain amount on the borrowed money. This is what we call “interest”.
For example, you want to buy a $2,000 car, but you only have $1,500. You ask your friend for the missing $500, and you both agree on 10% interest meaning you have to pay him back $550 when it’s all set and done.
Now that you understand what debt is, let’s dive into the 4 types of debt.
The 4 types of debt:
Secured debt: When you borrow money from a bank, they ask you to give them something valuable in return, like your house or car, as a guarantee. If you fail to pay your debt, the bank will sell your guarantee to get its money back.
Unsecured debt: If you can't (or don’t want to) offer something valuable as a guarantee, the bank has another way to decide if they should lend you money. They will look at your credit score, which shows how good you are at repaying debts on time. This way, they can still give you money, but usually less than they would if you had offered something valuable as a guarantee. Credit cards, car loans, and student loans are examples of unsecured debt.
Revolving debt: Just like a revolving door, revolving credit allows you to keep using the money you borrowed, as long as you pay it back. Credit cards are a great example of this type of debt. When you get a credit card, the bank gives you a set amount of money that you can spend. You must pay back the bank later, but once you do, you can reuse your credit card.
Mortgage: When you borrow money to buy a house, the bank will use the house as a guarantee. The bank still wants to make sure you're good at repaying debts, so they check your credit score first. Failing to repay the mortgage results in the bank taking your new house away from you.
As with everything in life, debt has advantages and disadvantages too. So here are some good things about debt:
It can help you make big purchases
It can open up new opportunities like student loans
It can decrease your tax obligation
It is a legal and convenient way of financing
But, there are also some bad things about debt that will keep you living paycheck-to-paycheck:
It can increase the lack of financial resources
It comes with interest which can add up to a lot of money
If you have secured debt, you could lose your personal assets
Now, if you have debt and want to get rid of it, these 2 proven methods have helped 98% of my students (That's because the other 2% percent didn't read the whole email):
Let’s dive into it.