Time to get your priorities together.
In the pursuit of financial freedom, many Americans have queried whether they should be paying off debt or investing.
In general, being debt-free –– with the exclusion of a mortgage –– and having a sufficient nest egg are seen as the most important steps to attaining wealth and financial freedom. But, many Americans can’t do both with any significant results. The choice between one of the two can be difficult to navigate as they impact areas of your life in different ways.
Paying Off Debt
Although debt is viewed as the antithesis of wealth, it’s the low credit score that accompanies large amounts of unsecured debt that’s making life expensive.
Your credit score impacts how much interest you pay on everything from your car insurance to mortgage and rent costs. So, if you have plans to make big-ticket purchases, you should be focusing on paying off debt.
Investing/Building a Nest Egg
If you’re living paycheck to paycheck, what would you do in the event of an emergency? If you’re a one-income household, have kids, or are in an industry with high employee churn, having minimal or no savings and investments will be devastating if your circumstances change. So, in these cases investing and building a nest egg should be a priority. You should still try to pay down debt, but a considerable amount of your money should go to your nest egg.
