Hello. My name is Justin Weener. I am currently majoring in Finance and Business Management at Indiana Wesleyan University. I will be graduating at the end of this semester, and given my field of study, I have taken numerous courses on finance and investments. You might ask, “Why am I being told all of this information?” Well, I say all of this to help explain that I am in a tricky situation. As a finance major, my desire to invest is high. Not only that, but I have also known from a young age that the earlier you start contributing to a retirement plan or an investment account, the better (due to compounding interest) the end results will have the opportunity to be. So, I am asking myself, “Should I use the money I have currently to pay off debt or invest?”

Over the past few years, I have learned that there is more to a good investment than just the investment itself. Below are the steps that my co-workers at the Ron Blue Institute and I look at to make a strategic plan before investing.

1. Eliminate all high-interest and short-term debt (example: credit card debt, car debt, etc.)

2. Create an emergency fund (3-6 months of living expenses)

3. Save for major purchases (example: cars, home, furniture, etc.)

4. Diversify to meet long-term goals (example: retirement, college, lifestyle, etc.)

5. Complete long-term goals (example: maximize giving, payoff mortgage, etc.)

By looking at this plan, I can see that it is important to pay off high-interest and short-term debt, create or maintain a healthy emergency fund, and save for major purchases before starting a retirement account. These steps help me to understand that investing instead of paying off high-interest and short-term debt can be counterproductive. For example, if I held $15,000 of credit card debt at a 16.99% interest rate, what would be the advantage of investing in the marketplace, which averages a 7% return each year? By eliminating high debt, it can act as an investment on its own.

If you would like to discuss your thoughts on investing, I would love to hear them! You can set up a free meeting with me by emailing [email protected] or calling/texting me at 616-335-1021.