1. Consider the Amount of Debt and Income.
If your monthly income surpasses 10 percent of the debt, then you can decide to invest before paying off debt. For example, if your debt is exactly $3000 and your monthly income around $300 you can decide to invest before paying off debt. This is because your monthly income is less than 30% percent. If you decide to do well on investment and saving plans you can start by saving upto 40 percent of your income for a few month before starting a business.
2. Consider Family Size and Expense Rate.
Expenditure or rather spending rate most be considered on How to Decide Whether to Invest or Pay off Debt. What is the minimum monthly consumption in percentage? How much can you manage or save in maximum? Having ask all sorts of questions about your financial circumstances, you should budget your money in the sense that you save or pay off debt.
3. Built up Emergency Fund.
This involves at least 3 months savings of living expenses. People with a steady built up emergency fund can go into paying debt directly in order to avoid those sleepless nights. In a series of facts, making a better decision on this financial complexity reserves to individual's financial and expenses strategies. So you might spend alot of time making up to emergency fund but its worth doing. On straining get out of debt Emergency fund helps your mind to settle on just paying debt and free from financial insecurities.
4. Evaluating Your Situation.
Debts usually come from different directions, different demands, deadline and stability. Thus you can make decision whether to invest or to pay off debt on the basis of demand from your debtors. For example, paying off house rents is more important in order to have a shelter than that of credit card and other external minorities. So if it involves some strong allegations and aggrements, you better get that debt off your chest before starting up for investment.
5. Suggestive, Balanced Approach.
This idea was practicalized by someone closer and at least, because of its functionality I decided to include it on this list. In life, we sometimes need to balance ourselves in order to feel some flexibility and chances within us. Spend little, save little and send some little off to pay down your debt. Learn to reduce personal expenses at least to mark up a better functionality. At least you're making the best to pull off the burden from both sides. With this, once your savings build up to some considerable amount it is very wise to start up an investment plans to make up another income source to pay off debt. The easiest way to this is to divide your monthly income by 3 and split them according to the intended purpose.
One of the biggest steps to take in paying off debt is considering a larger base of financial stability. You must not budget on bonuses or promised cash. On How to Decide Whether to Invest or Pay off Debt, you should choose an investment plan that works faster to build up the fund in a real percentage and stable order.
