A financial advisor explains why you should pay down debt before building wealth, using fitness analogies to show how managing cash flow effectively maximizes your net worth growth.
So there are two sides to the seesaw. The first is debt reduction. That's one way to increase your net worth. The other is wealth creation. What we really focus on is helping you get both. How can we help you increase your assets and reduce your debt when you got both happening at the same time? It's when you get some great delta and your net worth absolutely skyrockets there. So, unfortunately, people try to do the wealth creation before they've started on the debt reduction. You've got to lose the weight first before you can build the muscle. And so it's really important that you focus on the weight loss, getting your affairs in order, knowing what your surplus cash flow is, building the equity in your own home before you start to create wealth or build muscle. It's sort of like a fat person walking into a gym and asking to get onto a muscle training program. The trainer's just going to say you need to remove the fat so you can see the muscle underneath. And that's what it is like with the wealth creation is you need to really just trim the fat financially, know what your financial position is, know your surplus cash flow before you can start to build wealth. Because building wealth is such a great phenomenon, you want to make sure that you've got as much cash flow put towards that as you possibly can. Because if you've got cash flow going towards paying credit cards or car loans or personal loans, it should be really going towards the wealth creation first. But one domino's got a four. That's a debt reduction before the wealth creation can really step up. So focus on what you need first, debt reduction first, wealth creation second. But the most beautiful thing is when you've both got them happening at the same time, that's when you achieve some amazing results. And luckily enough, we can help you on both sides of the fence.
