Why Paying off Debt is More Important than Saving or Investing

[Mika]

The total market value of Apple Inc is $2.72 trillion. Apple has $202.6 billion in liquid assets (cash and investment). Despite sitting on a pile of cash, apple frequently borrows money and now Apple’s total debt is $287.91 billion. If the company wants, it can pay most of its debt but it continues borrowing.

When apple borrows, they have strategic financial plans, however, for common people, the first step to improving finances is by paying off debt. You need to save and invest to build your wealth. However, you can start saving and investing only when you have paid off your debt. If you borrowed for investment purposes, and if you are earning more return on investment compared to the interest you are paying on your debt that could be a good move. However, for average people paying off debt is the best way to build financial health. Paying debt is even more important during the recession as the interest rates are increasing and you will be paying more. Therefore, you will have to increase your repayment amount.

 

[Carpon]

You are right. For any business person who operates on an average scale, paying off debts is more preferable than saving or Investing.
Debts are like burdens on you which the more you allow them stay, they will weaken you and finally break your business down.
Most businesses in my locality are down because the person managing it could not cope with the dangling nature of my country's economy and had to start borrowing to keep the business moving. What that resulted into is that he could not keep up with the business and all the loans he had collected which accumulated.
Therefore I so much concur with you in your move for the fact that priority should be placed on settling any debts hanging over someone or his business rather than channelling the funds into investment or choosing to save the money.
But any how, it depends on whether the investment is a quick one

 

[Jasmine]

Paying off your debt means you are actually building your income and wealth. Imagine, you are paying $300 for your student loan, once you pay back your entire loan, you will have additional income of $300 that you were using for loan repayment. Imagine, you have a home loan, once pay of your entire home loan, the house will be entirely yours, and your wealth will increase. Investing does not give you immediate returns, it will take years before you can reap the benefits of investment, however, when you start paying off your loan, you will see immediate improvement on your finances. If you regularly pay your debt, your principle amount will reduce, therefore, your repayment amount will also reduce. However, if you have multiple debt it will be very difficult to start paying debt. In such condition, you might even have to sell your asset to repay your debt.