We all know we should invest and save for retirement, but what if I have debts? It’s tempting to want to start investing. There are a large number of investment web sites that talk about how to invest. But should I deal with my debts first, or invest?
In most cases, unless you are a great investor, it makes sense to consolidate and repay your debts first. If you are paying 18% interest each year on your credit cards, by repaying your credit cards you are, in effect, earning for yourself 18% interest after tax. There are very few investments that will earn you 18% after tax each year.
Borrowing to invest is often a good idea, because the interest on your investment loan is usually tax deductible. However, unless you are earning more on your investments than you are paying on your credit cards, a debt consolidation loan should be used to repay debts.
More debt consolidation loans information can be found on our debt consolidation loans information site.
You must log in to post a comment.