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Pay Off Debt or Invest?

Pay Off Debt or Invest? Photo“If I will pay off my debt, surely am going to lose my money. And I can’t anymore afford to meet my needs or buy new stuff especially if am earning a fair enough salary. However, it eases my fear to keep on skipping from my payments and makes me credible as the payer.

But if I’m going to invest the money, what assurance do I have that it will be profitable and helpful to pay my incurring debt?”

Perhaps by chance you’ve been thinking about these comparison multiple times already. It is good to balance everything in decision-making.  In a practical manner, to pay debts is actually safer than investing because it is the ongoing issue in your finances.

However, investing your money instead of paying off a debt has a 50-50 chance of gaining easier and producing more money. Hopefully, you would be able to pay even the entire amount of your debts and finally get out of the bondage of your payment obligations.

It is good to pay off your debt or it may be better to invest; on the contrary, maybe none of the two would be a good idea. But it is always a case-to-case bases.

Paying off the debt can be easier if you can really afford to sustain it because of a high paying job you have. Yet in a scenario, where your earning is fair enough to pay your debt and to meet your immediate consumption, maybe paying needs a second thought and investing as another option.

With this, I arrive with the idea that paying off debt  and to invest are effective to work on,  I would like to present different  tips for you to either pay off your debt or to invest, or to do both.

Advanced payment

Before you can even consider investing, you’ve got to make sure that you actually have extra money. Reserve enough income to keep all your debts current.

Getting behind on your debt payments can damage your credit and cause you to incur fees that will quickly overwhelm the return on any investment.

Pay at least your minimum payments on all your debts, on time, every time.

Think of debt payments as an investment opportunity, paying your debt including its interest in advance.  So in the near future, the pay which is actually the interest could be saved or used for investment.

Save for yourself

Make sure that you would always have to keep even a little amount of money intended for emergency cases.

Pyramid scheme

Prioritize your debt by listing them from lowest to the highest amount. Pay first those amounts that you can afford.

Rate of return=Interest rate

When examining an investment opportunity, compare its rate of return to the interest rates on your debts.

Pondering taxes

It is not enough to look for the interest you’ll receive on an investment or pay off debt. You have to consider as well whether the interest on your investment is taxable and whether the interest on your debt is tax deductible.