Choosing Between Invest or Pay Off Debt

Most of us are in a difficult choice when it has excess money, would be used to pay off debt or to invest. Joshua Kennon, debt management advisors have a view that the debt can be categorized into two types of debt with high interest rates and debt with a lower interest rate.

Credit cards are included in the first category had higher rates of interest and hence when an individual has more debt in the form of credit card payment is advisable to go ahead and pay off the interest and not think about investing.

In the case of the second category of debt that has a lower interest rate then it is advisable to invest to deliver higher profits. According to Kennon, there are two things to consider include:

a. How is the return on investment?

b. How big is the interest rate of a variety of debt being undertaken? 
Only if someone can convince himself that paying off debt will help him to reduce the financial burden and to pay everything off will increase the amount of money that can be saved each month.

According to Debt adviser Steve Bucci a, there are two methods that can be implemented by the personal debt with interest rates that are smaller in amount and easier to pay. The second is to pay for one, which has higher interest rates like credit cards.

Thus when an individual pays off a number of debts then he feels good about himself and can start concentrating on the next amount of debt that must be paid or the investment he wanted to venture into. In the case of debt, which attract a higher interest rate, one can pay the first one that he left with more cash later so that he could concentrate on other debt. But whatever the choice of the individual to choose the one, which suits him the most and can give him more comfort.

Steve Bucci also advises that paying debts must reflect on one's credit rating. When an individual starts to pay off the debt to the lender in a timely and consistent then credit rating will go up. This in turn will benefit him at the time to come when he had to take on more debt greater for other types of investment.

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