With cost of living and student loan debt rising across the board, people are looking for debt relief through any means necessary. One of the most overlooked ways to deal with that is through investing. Investing away debt has a double advantage — you gain the ability to make money on top of paying off debt, and you do not need to have much to start. Here are some of the best practices.
Using Investing to Save
A great way to get rid of debt is to save for an emergency fund. Having an emergency fund keeps a person from having to dip back into credit if an emergency happens. Investing for this emergency fund ensures that it can be accumulated more quickly.
Investing Without Income
The major advantage of investing is that you do not need as much income to create a suitable amount of money to pay down debt. The entire purpose of investing is to build money faster than the rate of inflation and the interest rate on your debt. If you do this, you do not have to start with a great deal of income, which may have been the reason that you got into debt (and are still in debt). Investing also doesn’t require a good credit rating, which is especially helpful if the debts you’re trying to erase have significantly damaged your credit.
Investing Eliminates Wasteful Spending
Many people look at their investment accounts like a bill. This is a bill that must be paid just like the lights and the gas. Because this is undoubtedly one of the most substantial bills that a person can have, it’s completely eliminates wasteful spending from the budget. There is no room for any mistakes when you have to fulfill an investment quota every month.
Forming Relationships with Financial Professionals
In order to invest properly, you usually need some help. This is the same for getting out of debt. You will need to form relationships with financial professionals, and as you do so, you will likely receive good advice on how to use other financial vehicles to get out of debt. These are the professionals who are privy to information that you simply do not have, and investing puts you on the same level as them. But if talking to a person about your finances makes you uncomfortable, try Robo Advisors.
Can you get rid of debt through investing? The short answer is yes. You still have to be a disciplined person, but investing has many advantages that you simply cannot overlook if you are trying to get out of debt.