When Paying Debt Is Better than Investing First

Investors often face the dilemma of paying debt first with excess cash or invest that money first to multiply it and then pay the debtors later. The answer is never too simple; however, here are some scenarios when paying down debt makes the most sense.

You have high consumer debt.

If you owe banks a lot of money for home and car loans and credit card purchases such new iPhone, flat screen TV, or couch, paying your debt first makes a smart decision. For one thing, it can help you solve ongoing financial problems and keep keep your debt from growing due to interest and penalty.

Financial experts observed the consumer debt increases when lifestyle exceeds income source, creating a serious financial problem. This is why as far as loans and credit cards and l are concerned, your goal should be debt reduction.


High interests can add up.

The longer you stall paying your debt, the higher the interest will add up. So, consider paying your debt religiously every month.

It can lead to bad credit score.

If you have too much unpaid debt, your credit score can take a hit, making it difficult for you to apply for a loan in the future. Aim for a debt-free life in order to increase your credit score.

It adds stress to your life.

While a little stress once in a while isn’t harmful, debt can create an extra stress in your life. Worrying about your interest rate surging up and the monthly dues you have to pay create constant stress that can lead serious health issues.

debt stress

You’re at the mercy of lenders.

As long as you have outstanding debts, lenders make decision about your money — you don’t. They set the condition how much you should pay them and how much. Your spending allowances are very limited. You really don’t get to enjoy your paycheck.

So, before thinking investing your money, make sure to pay your debt first and get full control of your finances.


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