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Paying Off Debt Vs. Investing |
By:
Michael Klein |
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Paying off Debt vs. Investing
Michael Klein
The Question comes to me quite often. "Should I pay off my debt with the extra money I have or invest it?" My response is always the same: "Isn't paying off your debt a good investment?" I love answering questions with questions because it makes me feel really smart.
It must resonate with you to think that when you keep yourself from paying the interest on a debt, you are indeed: making money. Of course this is not money you can withdraw and spend, but rather future savings: an investment.
Most investors will not make an investment decision without a projection of return on investment. Assume an average return on investment with moderate risk is about 10% to 11.5% over a period of 20 odd years. The average credit card debt interest rate is 12.99%. Can you see the financial return on investment?
One of the key differences between paying off debt and investing in a stock (investment) is risk. With the debt you are guaranteed to make interest payments over the life of the debt, however, with the investment there are no guarantees.
The problem is most people don't know anything about investing, and most people don't know how to speed up paying off their debt. For isn't paying off a principle balance faster, much like having a stock skyrocket?
So now we are coming to a highly important point. Having an investment make huge gains is much like paying off debt quickly. The question remains, how do we as people in debt, pay off our debts at an accelerated pace?
There are only a couple of ways to do this. One is to change the rate of interest that is accrued. Another is to slash the term of when the payment is due, which will increase the payments. The final way is to increase the payments and activity.
If you learn how to leverage your lines of credit against one another you will be on your way to paying off your debt at an accelerated rate. We have determined this is a fantastic way for you to invest your money until you are debt free.
About the author: Micahel Klein can help you receive out of debt. Please visit http://www.uwin4life.com/ Uwin Financial and receive a FREE http://www.uwin4life.com/ financial report and begin living free from debt.
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Article Source: http://www.PopularArticles.com/article150547.html |
Article: Paying off Debt vs. Investing
Author: Michael Klein
Total Views: 41
Word Count: 394
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