There is no dearth of people who struggle to manage their debts to achieve financial stability. Paying off debts may be an effective solution but this may not be enough to make the ends meet. After all financial well being is something which requires you to take care of lots of other factors. Like there are regular monthly payments on your loans and smart investments. Many people feel that investment along with debt payment isn’t that easy. However, it’s not impossible either.
Balancing debt payments and investment at the same time
Before you make a choice you must decide what is more important for you, debt payment or investment. Following are some essential tips that will help you to decide. So, have a look at the tips below and follow the suitable way:
Evaluate your savings
You must evaluate your all of your savings first. Whether you invest or pay off debt, you need enough money for both. If you’ve lots of debts to pay off or want to invest along with the debt payments, then you must increase your savings. Modify your budget plan according to your requirements and concentrate on saving more. Make it a point to keep all your accounts current. Pay at least the minimum amount every month to avoid further debt accumulation.
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Treat your debts as your investment
Debts come with interest rate charged on them. So, by paying off debts as early as possible, you get to save more on the interest. The money you’ll be saving annually on the interest rate can be considered as the annual return. The more you’ll save, the better will be your return. Therefore, you can consider debt as your investment too. Only you’ve to put more money for debt payments to increase your returns.
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Pay attention to debts with higher interest rate
If you’ll do proper research, then you may find out some safe options to invest your money in. However, the profit you can make through a safe investment may not be adequate if you also have very high interest rate to pay on your credit card debts. Just because of that you need to prioritize your debts. Either pay off your debts with higher interest rate or the debts with smallest balances first. This will help you to increase your savings considerably to invest more.
Make sure you know it all about the taxes
Apart from taking care of the interest rate you must also consider tax consequences. You must check from beforehand whether the total interest on the investment is taxable or not. Also you need to know about the taxes applicable on the interest on your due debs. For instance, if you’ll opt for investment in 401(K) plans and the traditional IRAs, then you’ll be able to reduce your taxable income. So, you must keep saving in 401(K) plan along with paying off debts.
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So, if you want you can keep investing along with paying off your debts. All you’ve to do is to find the right way to achieve your financial goals. You may even consult a professional who’ll help you in deciding the right way. Also you can go through our facebook community page to know more.
About The Author: This post has been contributed by Stewart Bradley, a contributory writer associated with the Debt Consolidation Care Community. He holds his expertise in helping people who are in debt. In this post he has discussed about the points to balance between debt repayment or investment. Hope you enjoy reading.
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