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Investing While in Debt: Reasons You May Want to Think Twice

Personal_Finance / Debt & Loans Oct 28, 2014 - 05:31 PM GMT

By: Boris_Dzhingarov

Personal_Finance Thinking about investing in your financial future? Whether it’s the stock market, real estate, or retirement savings, smart investments can definitely lead to financial gain. However, it seems that there is an overwhelming understanding that being in debt while investing is okay…

While it would be nice to essentially use our investment opportunities as a method for paying off our debts, the likelihood of that happening is slim to none. You see, you need to have money to invest in order to turn a profit, and if you’re in debt, chances are you don’t REALLY have money to invest. As long as you owe someone, the money you’re investing is not your own.


So what should you do? Find a method for paying off your debts and cleaning up your credit history, such as legal credit repair services. Of course this is not likely something you want to hear, but it is the best and most efficient method for ensuring that your investment endeavors work out in your favor. Not convinced? Maybe these reasons for paying off your debt can persuade you otherwise.

Debt Leaves You Indebted

As stated previously, if you’re in debt, that means the income you earn is not your own. Whether you need to pay off a credit card or an old personal loan, until that debt is settled in full, you are in the negative. So essentially, the real estate you’re looking to turn into an income property will not generate a profit for you until you’ve paid off your credit card debt or personal loans.

Builds the Discipline You Need for Smart Investing

When you think about investing you should be thinking long term. To gain a profit from your investments, it not only requires making smart decisions on what to invest in, but it requires your ability to continually fund the investment on the regular basis.

One of the main reasons that individuals fall into debt to begin with is because they lack the discipline necessary to budget and save money. By making regular monthly payments to your creditors over the course of a few months, you are learning the process of setting money aside on a regular basis. This in turn, creates the discipline you will need to set money aside to invest.

You’re Playing with Money You Can’t Afford to Lose

When you really think about it, a person in debt that decides to invest is using money that they really can’t afford to be without. Should the investment not work out, (i.e. the stock market crashes or the tenant you move into the income property doesn’t pay rent) you’re left trying to figure out how to fund your investment while still in debt.

Free Up Your Cash Flow for Further Investing

Paying off your debts and cleaning up your credit will eventually free up extra money. This money in turn can be used to build upon your current investments or to find new investment opportunities. At the end of the day, this means more money for you.

Ready to start knocking those bills out and removing those negative credit ratings? The first step is getting informed. Learn more about factors that impact your credit score and what you can do to change that. Make some calls to your creditors to set up arrangements, find methods for removing inaccuracies or old accounts, and get your credit history under control. Once you’ve handled that, you can begin investing with a clear conscious. 

By Boris Dzhingarov

© 2014 Copyright Boris Dzhingarov - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


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