We have only a small amount of the debt – which can pay for the year. . . But we also have to start saving (RRSP, etc.). Would it be better than paying debts immediately and then start saving? Or should we spend some money to both pay the debt and slower?
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8 answers
Sh*t For Brains Liberal
March 7th, 2010 at 11:36 pm
PAY OFF DEBT. STAY DEBT FREE.
Then you’ll have more to invest.
Drew S
March 8th, 2010 at 12:16 am
you have to look at the interest rates on the things you need to pay off and compare them with the rate of return you will see from your investments. If you can see a greater return from investing while holding a little debt and slowly paying it off, then invest but if your debt is high interest credit cards pay them off. A mortgage or student loans are examples of things that really don’t need to be paid off early.
eileezy2002
March 8th, 2010 at 12:25 am
Paying off debt first is a good idea. Remember that most payments have interest, so paying it off as quickly as possible will save you money in the long run, which you can use to start your savings.
Additionally, being debt free will give you piece of mind, and that’s something you can’t buy.
Brian G
March 8th, 2010 at 12:26 am
Put your money toward whichever one will give you the best return. Credit cards usually have a much higher interest rate than most investments, so you will usually want to pay those off first. Car loans may be lower interest than you may be able to get as a return from investments, so it’s not such an easy call there. If the investment is an employer matched 401K, consider the matching amount part of your return on investment.
Tom T. Hall
March 8th, 2010 at 12:56 am
What kind of debt … CC? Pay that off before you even consider ramping up your savings and investment program. Like my grandpappy used to say, “You gotta wash the walls before you can put paint on them.”
Jen G
March 8th, 2010 at 1:02 am
Pay off the debt first. Once you’ve paid the debt off, you’ll be free to invest your money.
frugernity
March 8th, 2010 at 1:13 am
My argument is only invest while you have debt if you are GUARENTEED to earn more on the investment than the interest on the debt. So if you have a 5% loan and can invest and earn 6% GUARANTEED then do it. Otherwise pay off the debt first.
An exception would be where you get matching money (like in a 401(k).
Also take tax advantage into account on deductible interest (if you pay 6% and are in 25% tax bracket treat that like 4.5%).
pattibcacl
March 8th, 2010 at 1:33 am
If it was me I paid off my debts first so I woun,t have to worry and then start to save from each paycheck and good luck