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Should I Invest While Still in Debt?

It is usually not recommended for individuals to invest while they are still in debt. Most likely, the interest they need to pay on the debt is higher than the interest earned on investments. However, this is not always true because in some cases, investing can yield a lot of dividends and prove to be a wise long-term strategy.

Taking your situation into consideration, how wise is it for you to invest your money if you still have some financial obligations left. Well, some factors you need to take particular note of include the amount of consumer debt you have, your 401(k), and the potential in the market. The following blogs below can help you get a better grasp of the relevance of investing while in debt:

Nickel @ FiveCentNickel uploaded a blog post titled “Pay off Debt or Invest?” In essence, the blog talked about investing only if you can reasonably expect your investments to outperform the interest rates you need to pay on your debt. It also pointed out other practical factors you need to consider including the amount of emergency fund you need and your contribution limit.

Matt @ DebtFreeAdventure pointed out that there are certain situations when investing might be a good idea in his post “Should I Invest While Still in Debt?” For example, if you only have low-interest debt such as student loans and mortgage, then it might be a wise strategy to invest some of your money provided you set aside a certain amount for emergency. Secondly, if your employer matches your 401(k) contribution, then adding money to your account will help you get “free money”.

Lazy Man provided commonsense financial advice in his blog post “How to be a Smart Investor in Any Investment Environment”. Taking careful stock of your debt, reevaluating your investment portfolio, and reassessing your financial strategy are all important steps that will keep your finances healthy.

Top Money Saving Tips for 2009

Though a lot of economic indicators reveal that the US economy might be on the road to recovery, its effects are still not being felt by the ordinary American. The unemployment rate is still rising, foreclosures are occurring in almost every state, and the amount of credit available in the market is still limited.

Given all these challenges, what can a struggling person do? Well, we have compiled a list of blogs that can help you during the tough times. Everything from how you can save on your grocery bill to how you can lower the operating cost of a business is discussed here.

Billshrink Guy posted one of the best money saving blog post for this week. His post, “16 Depression Era Money Saving Tips” provided comprehensive recommendations from buying used stuff to moving to a more prosperous location. The blogger also puts a lot of things in perspective when it comes to money management.

BloggyBiz has a recent post about effective small business management. The article entitled, “Saving Tips into Business Management” is very helpful. It looks at the major operating costs of running a business including marketing and staffing. The tips are mostly commonsense stuff that is nevertheless beneficial to anyone with a small business.

If you’re looking for ways to save on food, then the blog Not Made of Money is the right one for you. The just-posted article titled “Family Food – Easy Ways to Keep the Budget in Check” provides useful tips that can help American households save on food. For example, it advises readers to eat at home rather than go out and to make meals in bulk for time and cost considerations.

Madison @ My Dollar Plan blogs about consistently good bank deals. Posting whatever bank bonus, generous interest rate, and other great deals, people who are having trouble with their current bank should consider looking into this site for alternatives. The most recent post, “Bank of American $25 Bonus” is just an example of the kind of article she regularly features.

Is Your Money Safe in the Bank? – Weekly Round-Up

During the past year, the government has taken drastic steps to repair the financial system. It has injective billions of taxpayer money and created a new regulatory structure to ensure that the financing problems facing the nation’s biggest banks today will not reoccur in the future. In addition, a “stress test” was also conducted and it was revealed that big banks need to raise an additional $75 billion in capital to prop up their balance sheets.

While bank shares remain low, most banks are now recovering from the crisis. It is only a question whether depositors and investors will still trust banks with their money. There are many factors to consider today with regards to choosing the bank you trust your money with. Of particular note is the emerging gap between the healthier and weaker financial institutions. So the question is, which banks should you leave your money with? And does being a “healthier” bank a guarantee to the public that their deposits are safe? Below are some blogs that dealt with the question this week:

Marcus @ Huffington Post filed an entry titled “Five Banks Seized, Raising US Tally This Year to 45”. Essentially, this short post merely stated facts about how bad it is for the financial industry. There are indications that the economy might rebound during the later part of this year or the first part of next year. For now though, the recession is still driving up foreclosures and unemployment.

Peter Cohan @ Daily Finance wrote an interesting blog post “Can We Make Safe Banks?” The entry started out by detailing why the planned 50% increase in executive compensation in Citibank is a bad idea. If the company is struggling and dealing with losses, then the people who are running them should not be rewarded. In addition, the article further explained why client deposits should be invested in the safest possible medium.

Dave @ The Wall Street Journal gave an in-depth analysis about how safe your money really is on the bank. His article “Is Your Money Safe in a Bank?” dealt with the issues most consumers are concerned with. Everything from the ups and downs of the industry to diversifying exposure is explained in this entry.

Federal Reserve Bank’s Additional Powers – Weekly Round-Up

This past week, talks in Washington centered on regulating the financial industry. The Obama administration has proposed to give the Fed systematic powers in overseeing the banking sector as a whole. A lot of lawmakers are criticizing this plan, arguing that giving too much power to the Fed might be risky. There is currently limited disclosure about the Fed’s multibillion-dollar lending programs. If they weren’t transparent in the past, why would they change in the future? Another concern is the structure of the Federal Reserve itself. Regional branches are not classified as government agencies.

Meanwhile, other lawmakers cite that the Fed has a conflict of interest. If it tasked to conduct monetary policy then it might not be the best body to supervise banks. Senior Fed officials have argued, however, that the two tasks are actually complementary. Since the agency is involved in crisis stabilization, they need to have other roles in the financial system.

Whatever the case may be, ultimately, it is the public who has to pay for the decisions made on Capitol Hill. Bloggers from all over the country have expressed their opinions about these developments. Here is a list of blogs that talk about the Fed’s proposed systematic role, the criticisms of the system, and how it will affect ordinary Americans:

Paul Joseph @ Prison Planet wrote an insightful blog post entitled “Ron Paul Slams Federal Reserve’s New Dictatorial Powers“. Here, he provides a lot of quotes from Ron Paul and explains his argument. The criticism of Obama’s proposal is centered on giving the Fed additional authority. It might be too risky for the industry as a whole.

The Look at Vietnam blog provides updated information about the news in Capitol Hill. One article uploaded this week is titled “Geithner Says Federal Reserve Best Positioned for Super Regulatory Role“. It explained the position of the Treasury Secretary. He also said that the plan will only give the Fed a modest amount of additional powers.

Sudeep @ the Wall Street Blog wrote an in-depth blog post, “Financial Regulation: Congress Takes on the Federal Reserve“. It basically outlines the arguments lawmakers have over Obama’s proposed reform and the administrations answer to these concerns.

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