While having $10,000-$20,000 in debt is not necessarily a huge deal in today’s economy, there can come a point where paying back one’s debt in a reasonable amount of time becomes unmanageable. The point at which this happens can vary depending on one’s specific income and other financial obligations, but if it ever gets to the point where you are unable to make payments or only barely able to make minimum payments on your debt, then you may have a problem. Fortunately, there are some truly great resources out there these days when it comes to cutting down on debt.
Make Debt Payoff a Priority
It can always be tempting to spend one’s money on things other than paying off debt. This is especially true around the holidays and other times of the year when it may be more ideal to splurge on a vacation or buy that special someone a gift. However, it is always important to keep long term goals in mind. With each day that your debt goes unpaid, you are only accumulating more interest that will turn into money out of your pocket in the long run.
One mistake that some people who are in debt make is to invest their money rather than using it to pay off debts directly. They believe that, if they are able to enjoy a large enough return on their investment, that they will be able to pay off their debts faster. However, the unfortunate fact remains that this is rarely the case.
Thinking About Investing?
If you have been thinking about investing as a way to pay off your debts, you may want to reconsider this decision. There are a number of reasons as to why it is better to pay down debt than it is to invest in the stock market. For starters, there is always an inherent risk in investing in the stock market. Any money that you put into a stock could end up going right down the drain. Even if you are very experienced in the stock market and familiar with trends, this does not mean that you do not run the risk of losing everything you invest.
If you have ever watched the stock market, then you know just how unpredictable it can be. One day, a particular stock can do great and the next day, it can completely plummet. Why risk losing any more of your hard earned money by investing in risky stocks? If you truly want to get involved in the stock market, you are better off waiting until you have paid off your debts before you consider doing so.
On the other hand, paying off your debts is 100% risk free. By using the money that you were thinking about investing in the stock market, you can guarantee that you will be paying down your debts and saving yourself money in the long run. How? Well, when you take into consideration that you will pay off more of your principal balance by paying down your debts than using the stock market, you can also guarantee that you will, in turn, pay less in interest over time than you would if you simply let your debt keep accumulating. In this sense, paying down your debt is completely risk free.
Not to mention, in paying off your debts as opposed to investing your hard-earned money in the stock market, you will be able to enjoy greater peace of mind than you would if you were to invest. With investing, you must constantly feel stressed out and on edge, checking your stocks and the market to find out how you investments are doing. Paying off your debts requires very little of your time or thought; simply send in a check or make your payment online and you can forget about it until it comes time to make the next payment.
Think About Your Future
Overall, while investing in the stock market may seem like a good idea, the fact remains that doing so would only put you at a greater risk of losing more money. And if you are in a situation where you are already in a great deal of debt, this is something that you simply cannot afford. Fortunately, you can always use the money that you would have used to invest in the stock market to pay off debts instead. This way, you can enjoy the peace of mind in knowing that you are chipping away at what you owe so that you can enjoy a less stressful life in the future once your debts are all paid off. It is at this time that you may want to consider investing in the stock market or doing other things with your hard earned money and not have to worry about it so much.