So you have some money left over after paying the necessary bills. That’s good news. But should that money go toward investments or toward reducing your debt?
It’s not a simple answer, and it depends on
what you owe,
how much you owe, and what your investment plans are. Here are some general guidelines on whether to invest your extra cash, or pay down your loans.
1. Always keep cash on hand for emergencies
Do not fully empty your bank account in order to pay down debt or invest. Always keep some cash on hand for emergencies.
A common rule of thumb is to
build and maintain an emergency fund, of about six months of your income, before making decisions like whether to invest or accelerate loan repayment.
If you do not have any money and are faced with an emergency, you will often end up taking a loan. ......