Pay down debt or invest?

Consider the math and your psychological traits before deciding.

Gail Bebee 22 July, 2016 | 5:00PM
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Whatever the reason -- an income-tax refund, an inheritance, smart budgeting, etc. -- Canadians may find themselves with some cash to spare after paying everyday living expenses.

While the siren call to spend, perhaps on an exotic vacation, new car or wardrobe revamp, may beckon, paying down debt or investing the money are the best uses of any surplus funds for most people. If you have extra cash, how should you decide which of these two options is right for you?

Before choosing between paying down debt and investing, you need a clear picture of your overall financial situation and plans for the future. How much money will be available for investing or debt reduction after paying living expenses? How much and what types of debt do you have? What are the interest rates on this debt? What are your personal financial goals? Are you saving for your children's education, to buy a house or for another reason? When will you retire and what is your retirement savings goal?

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About Author

Gail Bebee

Gail Bebee  Gail Bebee is an independent personal finance speaker, teacher and the author of No Hype--The Straight Goods on Investing Your Money. She can be reached at; her website is

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