I am a 22 year old soon to be a dad and also trying to save as much as possible and be financially responsible not only for me but also for my wife and our baby when it’s born my problem right now is that i currently have a debt of 5k on credit cards I’m slowly trying to pay them off while also investing into the stock market moving on to my question with the debt I have should I pay my debt first invest later or should I continue what I’m doing which is both
Feeling stuck and not sure what to pursue
byu/Key-Energy-546 inpersonalfinance
Posted by Key-Energy-546
7 Comments
Sounds like you are asking about a framework for what to do with money.
Start with reviewing the Prime Directive in the PF Wiki. It will answer your question and many other questions you didn’t realize you should be asking.
* https://www.reddit.com//r/personalfinance/wiki/commontopics
Your question – and others like it – are already covered here:
https://www.reddit.com//r/personalfinance/wiki/commontopics
For starters, go through “The Flowchart” in the link above, and look at the first few steps. How many of those steps have you already completed? Look at further steps to set your priorities.
REALLY: Everything you need for a solid financial plan is in the the Personal Finance Wiki. The concepts in most every good-quality personal finance book or video are already embedded in the Wiki’s plan. After using the flowchart, review the items in the list for your age range. Use different sections of the Wiki to update your plan as your circumstances change.
I wish the PF Wiki existed when I was young; it would have saved me a lot of time and work – and helped focus my efforts earlier in life.
I would focus on paying them off before investing. The interest rates on your cards are likely much higher than the return you’ll get investing. You should also sit down and create a solid budget to understand why you have the credit card debt and make sure you don’t get into it again. Credit cards can be a tool but you should pay them off right away, so don’t use them for anything you don’t already have the money for.
Your debt is probably at a ~23% interest rate and your investments could make 5-15% if we’re being realistic. So what sense does it make to not just focus on the debt first?
It’s simple math, stop investing until all high interest debt is paid.
Congrats on the baby, that’s a big step. I’d probably focus on clearing the credit card debt first since the interest adds up fast. Investing can wait a bit while you get that under control.
Put every dime you can into paying CC. Don’t buy ANYTHING except food, shelter, transportation vital to work/survival, and baby stuff for the next couple years. No vacations. No eating out. No concerts. No clothes. Pick up overtime or a side job.
Banks are not your friends. Get rid of the credit card debt. Congrats on the kid. Good luck!