I Have Some Extra Money. Should I Invest or Pay Down Debt?
If you have extra money, you may be wondering if you should invest or pay down your debts. What if you want to do both? Which should you do first? The easy answer is that both options are equally important and can be done at the same time without having to choose one over the other.
As a general rule, you can start by taking a look at the debt you owe; specifically, the credit cards and/or loans that have the highest interest rate. Start with those first. Doing so will not only help you reduce that particular debt and help you get ahead, but it can also help you raise your credit score, which will help you in the future if you are planning to make important financial decisions such as buying a home.
If that particular debt is too high and paying it down wouldn’t allow you to save at the same time, you also have the option to pay the minimum payments each month to those credit cards or loans. By paying the minimum payment, this will give you the opportunity to put a little money away each month for investments or emergency savings. Even if you are able to save a small amount each week, you have the option to let it sit in the account and build over time, which will create peace of mind for you knowing that it’s there when you may need it.
While both paying down debts and investing for your future are important, you can do both at the same time to help you build financial security for your future. By prioritizing your options and investing in your financial health, you’re making a wise decision that will help you both now and in the future.