Should You Pay Off Debt Before Saving And Investing?

724 WordsMar 6, 20173 Pages
Should you pay off debt before saving and investing? Well, my answer to this is, it all depends. Yes, it all depends on your own specific goals and what you want out of life. Personal finance isn’t always just a numbers game, that is why it’s called “personal” finance. There is a personal side to it that only applies to you and it varies for each individual. Each case is unique too. Some important factors are the amount of debt you have and the interest rates you are paying on them. You should ask yourself a few questions on deciding what to do. Are those debt payments tax deductible? Is my debt to income ratio within my means? Is this debt putting a stranglehold on the lifestyle I want to have? Can I afford the payments? etc.. In my…show more content…
In 2017, $1000 is not enough for an emergency. We’re living in times where a medical bill can wipe that $1000 clean out. Now if Cris had a few years in the workforce under his belt and built a reasonable amount of savings let’s say 3 months worth of expenses, I’d recommend saving at least $150 a month still and putting $250 extra on his car payments. I don’t believe in just focusing on one thing 100% of the time. I’m big on diversifying your goals and also adapting them according to your priorities at the time. If Cris would’ve paid all of his $400 excess cash flow per month on his car and found out he needed $1500 for an emergency surgery he wouldn’t be able to get that money back from his car lender. Now Cris would have to borrow more money and fall into another cycle of repaying someone else with interest. Even though the monthly payments may seem reasonable, every month you have that loan it’s decreasing your own ability to build wealth. My theory is that we’ve been hypnotized as a society through advertising to consume beyond our means. To pay lenders before we pay ourselves, they reel us in with the promise of instant gratification. I’m not saying debt is bad I just want people to not fall into the debt traps that are being laid out for you. If Cris didn’t have a car payment he’d have an extra $775 per month total. Now if he had an unexpected expense pop up, there’s more wiggle room in his
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