Debt Versus Investing: A Simple Solution!

For today’s guest post on debt versus investing, please welcome Jeff from Have Your Dollars Make Sense.

So I have often thought about and read about the idea of which is better when it comes to debt versus investing. Pay down debt or invest. This comes up a lot in forums, blog posts, etc. It seems to be a perpetual question and I get it. Who wants to be sitting in debt!? Being a slave to the man! That’s a big no for me. Debt flat out sucks and it can definitely limit all future choices… but on the other hand, we all want to build our net worth. We all want to build wealth. We don’t want to funnel all our cash into debt when it could potentially be earning more in capital gains in the market or elsewhere. So what to do… what to do?

Money gradually growing into more, as it does when paying down debt or investing

Debt Versus Investing

Max out all 401(k)s if there is a company match available

First off, max out all 401(k)s if there is a company match available. Free money is free money, right? Consider maxing out IRA accounts too due to the tax savings (if you make less than $117,000 as a single filer or less than $184,000 if married) and the beauty of the backdoor IRA otherwise. Okay, now that we have that out of the way, what about debt versus after-tax investments accounts?

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Avoid Debt, the Enemy That Can Drag Down Your Finances

Personal finance blogs are filled with stories about people who have overcome big personal debt over the years and then write about it to try to help you defeat your own debt. Debt is such a major problem! I get messages from regular folks who need help dealing with debt all the time. Of course the best way to deal with it is to avoid debt in the first place, but that’s easier said than done.

Cartoon of man trying to avoid debt with debt weight falling down on him

About 15 years ago, after my divorce, I too had racked up thousands of dollars in debt and when I remarried, my wife and I had a combination of over $25,000 in debt on our books (not including my mortgage). That isn’t a real good way to begin a new relationship and frankly, much of it was divorce-related expense, so that there wasn’t really even any shiny, fun stuff to look at and play with despite that debt.

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Paying Off Your High Interest Credit Card Debt Takes a Real Plan

I have always been a good manager of credit. A big part of that was learning from my mom and pop about spending within my income, but another part of that was that back when I was a kid, credit cards were not the way people paid for what they bought. Today it’s a totally different world and using your credit card is not only popular, it’s almost a requirement and the result is credit card debt.

Hand holding credit card, ready to get out of credit card debt

While Visa and MasterCard didn’t even exist until the 1960s and 1970s, everyone today seems to have one, two, or even more of them, and uses them constantly. That has led to massive overuse and huge debt run up for many people.

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How to Decide Which Debts to Pay Off First

Today’s guest post on paying off debts is sponsored by Credello.

If you have multiple debts you’re trying to pay off, you might feel overwhelmed. Which debt should you pay off first? Does it require high-level math (gulp) or a debt consolidation calculator?

Answers: It depends on your unique financial situation, you don’t need to be a mathematician (fear not, there are no riddles or word problems), and a debt consolidation calculator is very helpful but not absolutely necessary.

If you have multiple debts, you may be confused about which one to pay off first.  Here's how to pay off debt in the best order.

If you’re looking to find out which of your debts you should prioritize and how to pay them off, keep reading.

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Will Relationship Debt Destroy You as a Couple?

I was just discussing with my wife how these days we have planning resources for just about everything in life. We have health plans, retirement plans, wedding planners, and estate planning. You can plan a vacation with experts and plan where to go to college with sage advice when you need it. But despite the fact that we have marriage counseling and credit counseling available, they always come after the problems arise. And for unmarried couples, well, it may not even exist. “Couple planning” is left to the couples themselves and it can be a huge task to get it right. If there’s relationship debt, it gets even more complicated.

Relationship debt puts a serious strain on married and cohabiting couples. Here's how couples can plan to avoid big debt.

Debt can quickly and easily become a source of contention between a couple. That’s why it’s important to deal with relationship debt proactively, before it becomes a destructive force.

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Credit Card Debt, Stimulus Checks, and Spending

Do you often wonder how other people seem to make ends meet and you struggle with them? I have to reluctantly admit that over the years, I would look around and ask myself questions like, “How the hell can they afford that car?“ or “Where did they get the money for those three weeks in Europe?”

The U.S. is mired in credit card debt, and government stimulus checks aren't going to save us. We need to control our spending.

I seemed to work my rear end off and yet somehow I was never quite there—where they were. I realize now what a waste of time beating myself up about that was, but I did it and I’m sure I wasn’t alone. In my older, wiser years, I now know that big debt often is the way it was accomplished.

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How Can You Ever Dig Yourself Out of Debt?

We’ve all been there. Looking at the bills that just keep coming in and not having the funds or means to pay for them all. Financial stress is truly one of the most all-consuming kinds of stress that there is. And when you have a big pile of debt, digging out of debt can seem impossible.

Digging out of debt isn’t easy, but it can be done. You simply need to follow these steps to make a plan and stick with it.

It lingers in your mind like a fog, spilling over into other areas of your life, making it hard to concentrate on other things until you’ve been able to make a plan to get yourself out of the mess you’re in. It’s difficult to get yourself out of killer debt, but I promise that eventually you will be out of this tough spot! It’s been done by many and it can be done by you. So what can you do and how do you start?

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Killer Debt and Its Effect on Your Dreams

Everyone wants to feel like they have accomplished at least some of the things they have dreamed about over their lifetimes. You can call it our goals, our wants, our desires, or even the big one: the American Dream. So what are the reasons we often struggle or fail in that pursuit?

Is debt killing your dreams? It is keeping you from the American Dream? If so, it's time to take control of your finances.

It’s not any secret when you think about it. The American Dream is most often killed by debt. The American Dream has been the gold standard for life here in the U.S. for a really long time. It is probably the number one motivator we all have even though we don’t think about it that way. It is the reason why we want a good paying job and the reason why we want more and spend more on ourselves and our families. Whether it’s a new car, a vacation, or the big one—a great home and backyard—it is why we get up and go to work every day. And that’s the rub; we want so much that we are willing to let debt kill our American Dream!

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