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Every so often, you’ll have some extra disposable income. Should you use this “found money” to pay down debts or invest for the future?
There’s no clear-cut answer. If you’ve got a high-rate consumer loan, you might want to get rid of it as quickly as possible. But if you don’t owe a lot, and your monthly payments aren’t really affecting your cash flow that much, you might want to consider putting any extra money into an investment. For example, you might decide to fully fund your IRA for the year before tackling minor debts.
You could use the extra money to make additional mortgage payments; you might even feel more secure by lowering your mortgage. However, you may gain more liquidity and flexibility if you put your money into investments such as stocks and bonds, rather than into your mortgage.
If you do come across some extra money, take advantage of it — and when choosing to pay down debts or boost your investments, think carefully.
This is Marshall-Ben Tisdale, your Edward Jones financial advisor located at 200 Littleton Rd. in Westford.