If you've got debt, should you wait until you're debt-free to start investing? Many money experts will say yes, but me? I would have to strongly disagree! You see, if you were to wait 10 years to invest because you know it will take you that long to become debt-free, that's you losing out on 10 years of investment gains and investing experience.
Of course, if you have very expensive debt, like high-interest consumer debt, that should be your #1 priority to pay off first. The reason for that is if you're paying 20% interest on your debt, you'll most likely never be able to earn 20% interest on your investments. It makes more financial sense to focus on paying off your debt.
But if your debt is relatively low interest, such as a student loan, mortgage or car loan that you're paying 5% or lower on, then you should consider paying down your debt and investing at the same time as you will most likely be able to earn 5% or more on your investments, and it may take you years if not decades to pay off those types of loans.
Lastly, one very important thing, no matter your financial situation, you should prioritize having a fully funded Emergency Fund before you start investing. Having an Emergency Fund will help prevent you from getting back into debt or getting into further debt.
To recap:
1. Save up 3, 6 or 9 months' worth of your living expenses for your Emergency Fund.
2. Prioritize paying off your high-interest debt first.
3. If your debts are relatively low interest, pay off debt and invest at the same time.
4. Do whatever system makes sense for you! This is just my personal opinion, but I will really press upon you the importance of having that Emergency Fund!
#debtcommunity #debt #investing
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