Andy over at $aving to Invest tagged me with the Single Step Personal Finance Challenge created by Mrs. Micah. The challenge is to find “one step you can take to make your financial system better or more organized.” This is my first tag!:) It’s like finally getting a Valentine’s Day card when you thought no one had thought of you:).

Well, thinking in terms of what is most efficient a move, there are two close contenders for this single step. You’d think one would be just pay off my student loan debt now so that once I am on a salary after finishing graduate school, I won’t be needing to pay over $550/month in loan interest. The only problem with paying off debt, for me, is that it easily comes back. It’s like trying to kill a zombie. I’m almost always going to need some debt. It’s the lubricant or glucosamine of my financial system, helping me move my financial joints when I need some flexibility. And the reward I feel from paying off debt too soon is very ephemeral. I feel like I’ve just “tricked” myself. It’s a mirage. Debt is intangible, disappearing and reappearing like images in clouds.

On the other hand, building income and especially boosting cashflow is extremely tangible to me and feels like a real gain. I feel I’ve really accomplished something when I’ve been able to increase my cashflow. So here I agree with another of Andy’s posts about wanting to increase his monthly cashflow to $300/month from passive income. If you have enough monthly income to live and save money off of, you’re financially free in my books.

So I’d have to say that enrolling in DRIPS (dividend reinvestment plans) is the best single step anyone can take to improve their finances, or what I call their “moneyenergy.”

Four reasons why:

• no fees or commissions
• automatic dividend/distribution reinvestment
• often get discounts (free money!)
• future source of cashflow (if you keep them reinvested until then)

There are other great reasons too, but these are some big ones. If you’ve read my other posts on DRIPs you’ll know what else I have to say about them. I currently own about 15 DRIPs. This is probably a bit too many for where I’m at right now, but that’s ok. I like knowing that I’ve got them set up and ready to go.

If you’re broke, have a tiny income (like if you’re like most students), or a sporadic income, or you have too many debts to pay off all at once, I think that investing in stocks through DRIPs is truly the most efficient way to develop future streams of cashflow. No fees will hold your money back and you don’t need $250 to begin.

I suppose I need to pass along this little tag now, and I think I’ll pass it over to… Sean at Financial Ramblings (if you haven’t done this one, yet, Sean!), The Almost Millionaire and Free From Broke. What do you guys think? What’s your “single most important step?” “The key” to your financial freedom, so to speak, perhaps?