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Retirement Planning

When is it Time to Start Investing?

While I’m still mostly focused on paying off my debt, I have started thinking about when it’ll be time to start investing.

I have done a bit of investing in the past, mostly via an employer sponsored 401(k) plan, but that all stopped when I got serious about paying off my debt.

With only a few more months until I’m debt free (other than my mortgage), when is it time to start investing again?

Here’s my plan for once I’m debt free!

Build an Emergency Fund

I’ve had a small emergency fund in place the whole time I’ve been paying off debt. I wanted to make sure I had some savings to fall back on in case I had to make an emergency purchase of some kind. I knew I didn’t want to have to charge it to a credit card and de-rail my debt progress. That would be a depressing thought!

Once the last of my debt is paid off, I’ll go into aggressive saving mode. I’m aiming to have 6 months of living expenses in my emergency fund before I tackle any other financial goals.

Paying off My Mortgage

The next step after I build a decent emergency fund is to funnel extra money toward paying off my mortgage. I didn’t include this in my debt count because I consider this home to be an investment of sorts. I doubt it’ll be my forever home and I may even choose to rent it out in the future to make some extra money. But once my emergency fund is built, I will focus on paying off my mortgage. I will likely be less intense as I work on this goal and I will probably spend more money on things like travel and experiences.

Investing for the Future

Sometime after my emergency fund is built, I also ramp up my investments. As I said, I have some money in investments from my former employer, but I haven’t contributed to them since I quit my job.

I do plan to contribute a bit to my investments every year between now and this step so I can reduce my taxable income and continue saving at least a little bit for my future, but this is not my focus until after my full emergency fund is built.

I imagine that I will put some money toward investing during the time I’m working on paying off my mortgage, as I don’t think it’s a smart idea to put off investing for retirement that long.

So that’s my plan for my financial future. What’s yours? Are you currently investing?

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Erin Thompson

Erin Thompson spent years managing her own blog about budgeting and debt. Because of that, she has great insights not only about managing spending and borrowing but also about running websites profitably. When she's not writing articles for us, she's traveling and looking for new types of wines to try.
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