Most people are in debt for most of their life. This debt takes over their finances every single month of every single year. Over the course of these people's lives, they find themselves always paying out to debt, and never really making a plan on how they will be able to make money later in life. This can and does lead many people to retirement in poverty.
Many people throw around investing or paying off debt. While some people believe they must pay off their debt before they can invest, that's not always the case. Sometimes, it's better to invest than to pay off debt.
When You Should Invest Instead of Pay Off Debt
If you can't pay the minimum amount due on your debt, you should not be investing your money. Not paying the minimum due on your credit card will only result in infractions that will put you in a worse financial situation.
However, if you can pay the minimum payment, and still have money left over, you have two options:
- Pay more on your credit cards.
- Invest the money.
People usually pay more on their credit cards when their goal is to be debt free. Many people do not like the idea of owing lenders. For this reason, they do whatever they can to get rid of it. Once it's gone, these types of people have peace of mind, and feel much better about investing.
However, some people don't mind debt. They know they will always have debt no matter what they do. So, they decide that investing the left over money after paying the minimum payment can help their financial situation in the long run. How you might be wondering? Well, if their investments make them more money than what they are putting into it, they will be able pay off debt and live well.
But what if you're undecided about having debt?
You have to do what you feel is best for your situation. Many people don't make a decision on one or the other. Some months they invest a little and other months they decrease debt. Going back and forth often helps many investors find a balance between the two.
Just remember - you don't have to invest a lot, but the more you invest, the more you'll make. Take your time in your decision and then make a plan.
What Will You Decide for 2013?
It's a hard decision to invest, but it's a good decision. Investing in stocks or bonds can be lucrative if you do your research, which could help get out of debt. If you haven't done it before, just stick your toes in the water by investing a little extra money you have one month. Play around with it to learn the best way to invest for you. With trial and error, you'll start to carve yourself out a niche of investing that's perfect for what you can invest each month or however many months you'd like to contribute to your investments.
This article was written by Marcelina Hardy. She often writes on investments, debt collection procedures, and commercial debt collection topics.