Financial literacy is a problem in the United States. It's a problem in pretty much every country on Earth. With Australia and Canada being especially egregious offenders. In New Zealand, financial literacy isn't just an education issue. It's also something that affects personal health outcomes. So if you're planning on moving to one of these countries or just visiting, consider investing some time into learning about money before you arrive!

About the Right Type Of Debt

It's better to pay off your debt or invest some extra cash. The answer is that both can be good. But only if you have the right kind of debt. If you don't have any suitable investments in mind, then paying off debts will help nothing. You'll end up with nothing but more bills and less money.

But what if there are other options? For example, could I use my credit card for a new car? Or maybe rent an apartment instead of buying one outright? Of course! These things can all be done with credit cards as long as they're paid off promptly each month (perhaps even sooner). In this case, though, there's another layer: namely, whether these purchases are necessary at all!

Pay the high-interest debt first

If you have high-interest debt, it's better to pay it first. And each month that passes without paying off any of your debts means more money being siphoned away from other investments or going towards interest payments on those accounts.

So if you have a $10k mortgage at a 4% interest rate and another $10k credit card with an APR of 18%, then subtracting what would be paid in principal ($20k) from what would be paid when all is said and done ($30k), we get:

$20k -($20k)*100 = $10K

That means if our hypothetical couple could keep their monthly payments around $3K (they could do this through direct debit), they'd end up paying almost as much each year in interest as they would have saved by paying off their entire mortgage over time!

The Debt Snowball Approach

The debt snowball approach is great for staying motivated and paying off debts faster. Under this technique, you pay the smallest debts first, then move to the next-largest debts. You can make this process easier by using a spreadsheet or mapping out each process step. So that you know where your money goes each time you make a payment.

The debt snowball approach is also beneficial because it helps save money while paying off debt. Suppose you could pay off $1000 per month instead of just one lump sum payment of $1500 every month (like most people). Then at least half of what would have been spent on interest payments could be used toward saving for retirement or other goals instead!

The Debt Avalanche Approach

The debt avalanche approach is another way to pay off your debts. This method involves paying off the highest interest rate first, followed by the lowest balance and most extended term.

This strategy can be helpful if you have multiple debts with different interest rates and balances due in one year or less.

And after you've paid off your debt?

Once you've paid off your debt, what do you do with the extra cash? Here are some suggestions:

• Pay off any loans and other debts causing pain in your life. This can include mortgages and student loans.
• Invest your earnings in yourself through education or training that will make you more marketable.
• Invest in your career by doing something that requires skills learned from school or training (like being a computer programmer).
• Invest your earnings in your home improvement projects, such as painting walls, replacing old roof tiles, etc., because these tend to increase value over time (and could even be tax deductible).

Saving money is essential, but so is paying off your debt.

You might think that paying off debt makes sense because you'll have more money to spend on other things, but this is not true. The truth is that paying off your mortgage or car loan means that those banks can now sell their homes or cars at a higher price than they paid for them (and then make more money off of their initial investment) while at the same time increasing their profits by charging interest on those loans!

In other words: if you choose not to pay off debts, then these companies will be able to keep making money from them without having to return any cash to society as well as increase their profits - which ultimately means lower taxes for everyone else who owns something similar (like stocks).

Conclusion

You may think paying off your debt and investing are two different things. The truth is, they’re both critical. They’re both essential to your financial future. However, it’s crucial to recognize which strategy will work best for you. If you have high-interest debt like credit card bills or mortgages, then paying them off first may be the most efficient way to go about paying off other debts.

FAQs

Q: Should I pay off my debt or invest extra cash?

A: It depends on the interest rates of your debt and the potential return on your investment. If the interest rate on your debt is higher than the potential return on your investment, it is generally a good idea to pay off your debt first.

This will save you money on interest payments and reduce your overall debt. If the potential return on your investment is higher than the interest rate on your debt, it may be more beneficial to invest the extra cash. It's also important to consider your comfort level with risk, as investing carries a level of risk.

Q: Is it better to pay off high-interest credit card debt or invest the money?

A: It is usually better to pay off high-interest credit card debt first. The interest rate on credit card debt is often much higher than the potential return on investments, so paying off the debt will save you more money in the long run.

Additionally, credit card debt can harm your credit score if not paid off on time. Once the high-interest debt is paid off, you can consider investing the extra cash.

Q: Should I invest or pay off student loans?

A: It depends on the interest rate of your student loans and the potential return on your investment. If the interest rate on your student loans is relatively low, it may be more beneficial to invest the extra cash, as the potential return on your investment could be higher than the interest on your student loans. However, if the interest rate on your student loans is high, paying off the debt first may be more beneficial to save money on interest payments.

Q: Can I invest and pay off debt at the same time?

A: Yes, you can invest and pay off debt simultaneously. It may be beneficial to create a plan that includes making extra payments towards your debt while also setting aside money for investment. This way, you can work towards paying off your debt and building your investment portfolio simultaneously.

Q: Can I use my retirement savings to pay off debt?

A: It is generally not a good idea to use your retirement savings to pay off debt. Retirement savings are meant to be used for your retirement, and withdrawing money from your retirement account can have serious long-term consequences, such as losing out on compound interest and potential penalties. It may be better to look into other options, such as debt consolidation or working with a credit counselor to develop a plan to pay off your debt.