How to Paying Off Debt & Start Investing?

You are a voracious reader of business magazines, and watch all important TV shows on  wealth building, how to start investing and investment planning, you know about stocks and debentures, property and asset management, and know how to grow your money through systematic investment plans and many other options. And hence, you believe now is the ripe time to start investing to grow your money. But Wait! Did you think about your dues and debts? If you are still having debts behind you, then it’s never the right time to invest. Instead now is the time to clear off all dues first, and then think of investments.

The thumb rule of wealth building & Start Investing

It’s a golden rule, and a rule of the thumb, that to increase your wealth and grow money, you must invest. But even before that, you must clear off all debt you have. That’s because debt slowly eats away all your earnings, savings and wealth in future, if not handled carefully on time. A small debt can grow too big and unmanageable by a time when you would have little options left than to declare bankruptcy, and you would never want to do that and put your years of effort, reputation, asset and all at stake. Hence, at any cost, you must clear off the debts and then think of building any wealth.

The path to wealth building gets much hassle free when you can free mindedly plan for every penny of your earning in a constructive manner than to allot portions for paying here and there to the various creditors.

How to paying off debt?

Fighting debt is an idea which comes later into the mind of many who initially never care much about dues and payments, EMI dates and all those burdens. When things run smooth one really does not think much. But when you accumulate too many debts, then the problem gets noticed.

Things initially may look manageable when you allot certain portions of your earnings for the various loan funds where you have to pay. But then gradually with increased demand from family and necessities rising, earnings fall short, and the burdens from debts seem to grow high. In such cases, you often fall short of paying the EMIs for loans and feel miserable. Credit score starts falling, and reputation also gets affected in the market, while you start getting calls from creditors, reminding you of a few missed payments and late fines. Things gradually worsen and you one day find yourself in a deep mess of debt, bad credit, and serious mental and financial pressure.

How to Paying Off Debt & Start Investing?
How to Paying Off Debt & Start Investing?

If you find anything in common with the scenario described above with your life and situations, then now is the time to act and fight debt. There are ways, and whatever stage you are into, you still can turn around and fight back.

Let bankruptcy be the last option when you have nothing else to do but only sell off assets to pay, and you won’t do that. Hence bankruptcy should not be the choice until all other methods fail. According to your current financial situation and credit score, you may choose either to consolidate all debts or may choose to settle the debts.

Consolidating debts

Debt consolidation is a wise option according to which you sum up all your debts together, and evaluate the situation, and then apply for a loan amount equivalent to that sum from debt consolidation loan giving lenders. On getting that loan, you use it to pay off all your existing debts and their associated penalties if any. In this way, you get rid of all your current unmanageable debts, while you reduce your monthly burdens.

It happens so because you now get this consolidated loan at a lower interest rate than you used to pay for the other loans, and also you get a longer tenure to pay back the consolidated loan so that the EMI gets divided into a small and manageable amount per month. This way it gets easy to afford and manage, while you also discover that you are paying much lesser per month for the loan than you used to pay cumulatively for the multiple debts.

For this method to work, you need a few things, like at least six months of residency proof at the same address, and again at least six months of income proof showing a stable income, and a healthy credit score to get the loan approved.

Settling the debt

Debt settlement is another bright idea which clicks well when you have one big debt that you cannot pay off or a few such unmanageable debts. In a debt settlement you decide of an amount which you want to pay as per the maximum you can afford towards a loan, and then you give this proposal to the creditor and tell that you want this debt to be over and waived off of you after this payment.

Normally the amount you offer is much lower than the amount you owe. And this is where the need for negotiations arises. Both parties try to hold their benefits, and thus this settlement may take a much longer time. Until then you get the time to arrange the funds while you don’t pay a thing to the creditor until matters are settled.

A debt settlement is considered when you have no money at present to pay the dents, and also no money to pay the EMI of a consolidated loan too. Also, when you have a low credit score and won’t get a loan approved for you, then you go for a settlement instead of consolidation.


When you have settled all of your debts, it’s time to think about investing. Investing to grow wealth is enjoyable always when your mind is free to do this only instead of thinking about loans and paybacks. And once you start investing it becomes an addiction and affection both to see your money grow and invest in various funds and assets.

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