The time has come, you got a big chunk of cash say from taxes or a big check, now you are faced with the desicion to decide whether to repay debt or invest. It can be a daunting decision, nevertheless it’s one that must be made. You have not only your future but your family’s future to think about. It’s never an easy task. When choosing whether you should repay debt or invest what needs to be taken into consideration? Well there’s many things to take into consideration here, let’s take a look at some of them.
[Read: Controlling Your Personal Debt]
How to Decide?
There are my things to consider when you get some extra cash and are faced with the decision to repay debt or invest. Such things include:
1. Back up Stash.
Imagine you and your family take a road trip to go visit family, on the way back from the trip you hear a pop then the vehicle starts making a thumping noise. You get out to check everything over only to find you have a flat tire. Guess who forgot to put a spare tire in the back, yup you did. Do you have a back up stash of money to get another tire to get you and your family home? There’s something to take into consideration when deciding whether to repay debt or invest. Every person who has a sensible head on their shoulders should have a back up stash of cash set aside. When deciding whether to repay debt or invest they should consider their back up plan if they run short of cash.
2. Credit Card Debt.
The next thing to consider when faced with the task of repaying debt or investing obviously would be to take a quick (or long) peek at your credit card debt. What does it look like? Do you have any outstanding credit card debt? If so, the decision is pretty clear, you should repay your debt. But what if it’s not a lot. Should you repay your debts or invest? In all fairness you probably should repay this debt, if not to get it out of the way, then to put your mind at ease, you will feel so much better when you have that paid off. It will be a burden taken of your shoulders you didn’t even know existed. Let’s move on to see what’s next on this quest.
3. Kids College Funds.
Assuming you looked over your debt and have enough emergency money stashed away to get you by in case of an emergency, how do your kids college funds look? Do you even have a savings account open for them? It’s wise to set this up for your children so you are setting up their future for success so they are not faced with the decision to repay debt or invest as you are. You will be setting a phenomenal example for them and teaching them responsibility. If you are wise with money they are likely to follow the example you have set and not accumulate debt, but instead put it away and pay their bills on time. They won’t be forced to get a student load, ultimately getting themselves into debt as well.
When deciding whether to repay debt or invest you need to look over all of your debt, yes, that means your loans. Are you behind on any loans you have taken out? You see if you don’t repay your loans we all know that you can lose your house or car if you don’t repay your loans. It’s a wise choice to repay those if you are behind on them once you get behind not only is it not fun playing catch up, but it’s hard to get caught up to where you need to be.
5. Retirement Fund.
One of the best things you can do for yourself when deciding wether to repay debt or invest is investing in your retirement this way when you can no longer work you have something to live off of. It’s a smart move that guarantees you will be taken care of no matter the circumstances in the future, you need to think about it now while you’re young and making money.You want to make sure that when you are old and frail you can live the life you had worked so hard to have. Imagine sitting in your beautiful lake side home, sipping a nice hot cup of coffee overlooking the lake, not having a care in the world because you decided to invest in your retirement. It’s not just a dream you can have that, you deserve that.
[Read: Strategies to Get Out of Debt]
No matter what decision you decide to make, make sure when you do decide whether you should repay debt or invest, make sure you consider all the options, you wouldn’t want to make a mistake, because these are big mistakes that affect your entire life ahead of you.