BUS 215 Week 4 Discussion 2, Debt Reduction

BUS 215 Week 4 Discussion 2, Debt Reduction You read in Chapter 13 that it is vital toreduce your credit card balances and other consumer credit before beginning an investment program. You also need tostart an emergency fund incase of immediate need. Why do financial advisers make such recommendations? Why should you reduce spending on credit before investing? Why shouldn't you carry large consumer debt and invest at the same time? Financial advisors recommend that credit card as well as other debt be paid off before investing becaus if these debts are paid off the consumer will have additional funds toinvest. If these debts are not paid before the consumer starts toinvest there is the possibility that the consumer may have towithdraw monies from their investments early, which may result in penalties dependin upon the types of investments they participate in. Also unpaid debts can have a negative impa on their credit reports. It is also recommended that consumers establish an emergency fund. This emergency fund is tobe utilized if the consumer should encounter unforeseen issu or situations such as loss of income, health issues or emergency situations. By paying off debt and establishing an emergency fund before investing the consumer has made preparations fo unforeseen situations, ensured that there are no negative impacts on their credit histories and ar preparing for their futures and/or retirement.