If you have extra money at the end of each month, it can be difficult to determine if you should pay off debt or save for retirement. This is especially true if you are trying to build an emergency fund, have various forms of debt, or want to start investing. Though some individuals choose to either pay down their debt or save for retirement, the reality is that most people can do both simultaneously. While it can be difficult to pay off debts and save for retirement at the same time, it is achievable with proper planning and smart investing. As a leading provider of mortgage investment solutions, the team at PHL Financial Group knows how important planning is when it comes to paying off debt and bolstering your savings. That is why we have compiled a list of tips to help you create an effective plan.
Read our tips for effective budgeting.
If you want to effectively pay off your existing debts while saving for retirement, consider the following tips:
While budgeting may be stressful for some, it is a necessary step when it comes to paying down debt and bolstering your savings. Start by taking an honest look at your income and debts. Most people have various forms of debt ranging from student loans and car payments to credit card debt and mortgages. List your balances, minimum monthly payments, and the interest rates for each. From here, subtract each amount from your income to determine how much money you have left over each month.
Once you know how much money you have left over each month, you can create a debt repayment plan. This plan weighs the minimum payments and interest rates of each source of debt to determine which should be paid off first. In most situations, it is recommended to pay off high-interest debt first as this can cost you a lot of money over time. If you can eliminate high-interest debt by putting most of your leftover money into it for a few months, it is often worth doing so.
With your debt repayment plan in place, you should now know how much money you have left over for saving and investing. While there are several options available for retirement funds, it is also worth considering your investment options and learning how they can further bolster your savings. Certain options can help you accelerate the growth of your retirement savings, though it is best to speak with an expert to determine which options are best for your needs and risk preferences.
To more about our investing solutions or to discuss your investment goals, get in touch with the team at PHL Financial Group. We can be reached by phone at 604-579-0844 and will be happy to answer any questions you may have regarding our services or your financial wants and needs.