Investing for DummiesToo many people think investing is only for the über wealthy and those with sophisticated strategies. But everyone should profit from the power of compounding interest — and conversely avoid the debilitating effect of paying compounded interest.

If you've always lived paycheck to paycheck, step back and take a few easy steps to prepare for a brighter future. It's not hard to get off on the path toward financial freedom. Once you see the benefits — both in lifestyle and emotional well-being — you'll be hooked!

Here are some simple places to start putting your money after you buy necessities.

  • Pay off consumer debt
    Serious debt is like concrete boots. It will drag you down and suck the life out of you. Rather than spend every last penny every month, set aside a small amount to go toward consumer debt. Consumer debt is any debt incurred to buy things that are consumable and/or don't appreciate in value. Start paying off those credit cards, store cards, and any other such debt as quickly as possible. Avoiding the interest will give a big boost to your bottom line
  • Pay off secured loans
    Automobiles aren't usually included in “consumer debt,” even though they depreciate (rapidly, if you buy new). Even though most people need a car, the payments can become a huge burden. Add as much as you can manage to the principle payment each month and get this payment out of your life.
  • Pay down your mortgage
    Real estate generally appreciates (the housing bubble burst notwithstanding). Owning a home is part of the American Dream. But having a big monthly payment due, shapes your financial needs and your job requirements. Paying even a few dollars extra toward principle each month can slash months of payments off the end of your mortgage loan.
  • Open savings account
    My dad helped me open my first savings account when I was six years old. I still have that account. While savings accounts aren't going to make you rich off of interest payments, they accomplish something more important. Getting in the habit of savings instead of spending everything the minute (or before!) it comes in, puts you in the position to deal with emergencies and purchase needed items without incurring any more debt.
  • Buy a certificate of deposit (CD)
    Buying a simple CD for a relatively short term (six months to a year) is a very easy way to invest some money with little risk and an interest rate bump. You don't have to commit your money forever, just a specified time period.
  • Invest with an online brokerage account
    Once you're in the habit of saving money, you may be ready to invest in some stocks, mutual funds, or other, more sophisticated investment. There is more risk and due diligence is a must! But once you've done careful research, you're likely to create a nice cash flow from appreciating stocks.

The Securities and Exchange Commission (SEC) has created a beginner's guide to investing. Check it out.

Don't let laziness or fear run your financial life. Take steps to make your future comfortable by creating good investment habits today.