Paying off Debt vs. Investing
Author: MichaelKlein Total views: 36 Word Count: 361
The Question comes to me quite often. "Should I pay off my debt with the extra money I have or invest it?" My response is always the same: "Isn't paying off your debt a good investment?" I love answering questions with questions because it makes me feel really smart.
Isn't it logical to think if you save yourself from paying interest on debt, in a way, you are making money? Now of course the money you are saving from paying off debt is a future savings, therefore, an investment.
Many people who make investments like to see a "smart" return on the life of that investment. Let us assume an average return on a moderately risky mutual fund over a period of 20 years has a return of 10%. The average unsecured debt rate is 12.99%. Paying off the debt makes sense.
One of the key differences between paying off debt and investing in a stock (investment) is risk. With the debt you are guaranteed to make interest payments over the life of the debt, however, with the investment there are no guarantees.
Most individuals no nothing about investing at all, and most people don't know the first thing about how to speed up the debt elimination process. If you could pay off your mortgage 3 times faster wouldn't that be a smart investment?
The point I'm making here is this. Paying off your debts quickly is like having an explosive stock. The main question is how does one pay off debt quickly without spending more money?
There are 3 ways to do this. One is to decrease the term on the debt, which will increase the payments, another is to decrease the interest rate on the debt, and the final way is to increase the payment amounts and the activity.
If you learn how to leverage your lines of credit against one another you will be on your way to paying off your debt at an accelerated rate. We have determined this is a fantastic way for you to invest your money until you are debt free.
Article Source: Credit Card Bad Credit People
About the Author
author Micahel Klein can help you receive out of debt. Go to Uwin Financial and receive a FREE debt analysis and start living your life again debt free.
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