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Good day subscribers thank you so much for joining me today i am jeremy this is a financial education channel and today we’re talking about should you invest your money or should you pay off debt now this question gets asked me a lot from some of my older viewers some of my viewers you know that are thirty plus years old that maybe have a crude debt some of you guys
That are watching this video that may be super young you might not even have debt yet because you might have a credit card or have a car loan those kinds of things but i get this question a lot and i will give you guys what my opinion is on this now first off credit cards should not be used unless you’re trying to build credit my wife and i we have zero credit card
Debt zero zero zero credit card debt on all our credit cards we i don’t even know why we have credit cards maybe just to use if you know you need a hotel room or something and you need to have a card that’s for the the fee or something you know like one of those cards and in case you tear up the hotel room i think that’s why we still have credit cards but we use
Them to build credit and credit cards are a great way to build credit when you’re young and you need to you know prove yourself and buy something on the credit card paid off right away and kind of prove yourself up the ranks but for you guys don’t take our credit card but we do have an auto loan so auto loans are legit and sometimes you need an auto loan sometimes
You need a home loan so let’s say you have debt let’s say you have $30,000 in debt we’re going to ask how you got that debt maybe his credit cards unfortunately maybe it’s card debt and let’s say you have an extra two thousand bucks coming in per month in income that can either go toward paying that debt or it can go toward investing what i would do personally
Is if that debt is the the interest rate on that debt if the interest rate on that debt is over 8% for sure pay the debt absolutely put all that extra money toward paying the debt if that interest rate is around 6 to 7 percent i would split it i would use about half the money to invest about half the money to pay toward that debt if it’s under 6 percent i would
Absolutely invest and i would pay the minimum amount you could while study you’re getting that super low interest rate so if all that debts at a four percent interest rate of a three percent interest rate or something i would just pay the minimum amount you can pay on that the reason being is the stock market on average goes up around eight percent per year for the
Last million years or whatever so you can say if i’m just an average investor i should be able to get eight percent now hopefully you learn from me and you learn from a lot of other ways in your above an average investor but even if you are an average investor guys eight percent return well then that’s that’s let’s just focus on that let’s just focus on getting at
Eight percent let’s not bank on old we’ll get fifteen percent so then we don’t need to pay the debt at all that’s not being con that that’s just being on being an average investor which is why if it’s above eight percent that debt the interest rate on the debt you should absolutely guys without question pay the debt without question but if you’re paying three four
Percent why not invest why not try to make your money into more money because like i said if you’re just getting a decent person return an eight percent return that’s gonna make a lot more money that you can pay the debt in the future right you just have to not screw up and lose the money somehow those kinds of things but as long as you’re making minimum payments
And the interest rates are low you know it makes no sense to pay off that debt rather than invest where you can make a lot more money from the six to seven percent range i talked about that’s why i said you know split the money maybe a thousand toward investing per month thousand twelve paying that debt because at that point you’re kind of getting close to that
Average return there so it might make sense to put some toward paying that debt off and also the great thing about paying debt off is it takes a burden off you when you have a lot of debt and you’re carrying around a lot of debt it can put a burden on your specialty credit card debt that can put a big burden on your shoulders and you can just make you feel like ah
I got all this debt behind me when you get that lift off your shoulders you can pay off the debt you’re gonna feel like a million bucks and then the great thing is when you get off that debt paid off as long as you don’t go back into debt you’re gonna have maximum amount of money to go straight toward investing at that point there’s no you know minimum payments
You have to make on that debt there’s no anything so that is my take guys on on investing versus debt in my opinion stay away from the credit cards unless you’re trying to build your credit stay away from those credit cards auto loans don’t get an auto loan and if it’s above a 10 percent interest rate unless it’s absolutely positively the only way you can do it
Guys i’ve seen so many people get auto loans at 20 plus percent interest rates 15 plus percent interest rates and i’m like oh my gosh it just makes me wanna scratch my face off are you kidding me a 15 20 % interest rate it’s insane guys so please don’t do that if you’re young build your credit through the credit card system first you know makes make you know small
Payments and then pay it off and purchase something and give them the credit card little stuff and then paid off right away filled your credit card you know or excuse me your credit rating up that way then go ahead then pay you know and buy a car at that point when you get a much lower interest rate because i don’t want to see any of you guys paying a 15 20 %
Interest rate bottom line that’s sick that’s disgusting thank you so much for watching this today guys if you’re you haven’t subscribed you may want to i’ve talked about personal finance just like we did today talk about business on this channel i’m an entrepreneur and give entrepreneur tips every single week and we also talked so much about the stock market
Which we kind of did a little bit in this video although it’s more personal finance related thank you so much for watching guys and have a great day
Transcribed from video
Should you Invest or Pay off Debt? By Financial Education