Let us now spend a moment learning about what to look for when it comes to your DebtReductionSPEED™. I am going to start by saying it’s always good to be paying off debt. You won’t go broke paying off your debts.
That said there is a trade-off and judgment call you can make with your surplus cashflow. If you are in your wealth accumulation phase, to build up your assets and passive income for retirement, the choice to pay down the principal of a loan, whilst acceptable, might not be the most productive use of your money. It might be better to use that surplus money to buy another investment asset, either outside or with the use of debt. Debt which could be serviced by this surplus cashflow instead of paying down any principal to increase your DebtReductionSPEED™. Something to consider here is, whilst accumulating an asset base, a low DebtReductionSPEED™ might be a good thing. Once you have accumulated the right amount of income-producing assets, however, one would like to see the DebtReductionSPEED tracking upwards over time as you start to head towards your retirement.
If you think that simply focusing on paying down your home debt and then turning your focus to saving your way to a very comfortable retirement is a sure thing, you might want to think again. This is a sensible segway into SavingsSPEED™.