Dollars & Distractions - Episode 24 Where Should Your Extra Money Actually Go

Should you pay off debt, put extra money into savings, pay down your mortgage or invest it?It’s one of those personal finance questions that sounds like it should have a simple answer, but it doesn’t.In this episode of Dollars & Distractions, Mez and Bec chat about what to consider when deciding what to do with extra money, including whether you should pay off credit cards and personal loans, build your savings, put money into an offset account, pay down your home loan, contribute to superannuation or consider investing.The answer will be different for everyone because your financial goals, stage of life, existing debts, future plans and attitude towards risk all play a part.Pay Off Debt or Save Your Money?If you have extra cash available, should you use your savings to clear your debts?We discuss why the answer isn’t always as straightforward as simply saying, “pay off your debt.”For example, someone planning to buy a home soon may have very different priorities from someone who already owns a property and is thinking about investing for the future.There can also be a difference between the decision that makes the most sense financially and the one that best suits your lifestyle and personal goals.Should You Pay Down Your Mortgage or Use an Offset Account?We also unpack an important question for homeowners, should you make extra repayments on your mortgage or keep your extra money in an offset account?Mez shares an example of first home buyers who purchase a smaller property with the intention of upgrading later and potentially keeping their first home as an investment property.That future plan can be important when deciding where to put extra money today.We chat about the difference between paying additional money directly into a home loan and keeping cash available in an offset account, and why speaking with your accountant or other relevant professional about your future plans can be worthwhile.Should You Invest Your Extra Money?Then we get into investing.Shares, investment properties, Bitcoin, superannuation, gold and even Pokémon cards make their way into the conversation. 😂One of the biggest themes is understanding what you’re investing in.Something can feel incredibly risky when you don’t understand how it works. That doesn’t automatically make it a good or bad investment, but it does mean education and research are important before making a decision.We also talk about being careful about who you take financial opinions from. Just because something worked for a friend, family member or someone at a barbecue doesn’t necessarily mean it is the right strategy for you.What About Your Superannuation?Super is another form of investing that many Australians don’t pay much attention to, particularly when retirement still feels a long way away.Mez and Bec discuss their own experiences with superannuation, working part time, raising families, becoming self employed and eventually realising they needed to pay more attention to how their super was growing and how it was invested.It’s a good reminder to understand what you have, how your super is invested and what insurance you may have within your super fund.Financial Goals MatterThe biggest takeaway from this episode is simple:Before deciding what to do with extra money, come back to your goals.Are you trying to:Pay off high interest debt?Save a house deposit?Increase your borrowing capacity?Pay down your mortgage?Upgrade your family home?Turn your current home into an investment property?Build wealth for the future?Prepare for retirement?Simply have more financial security and cash available?Your answer can change what makes sense for your money.Sometimes there may be a financially stronger option, while another choice suits you better emotionally or personally.The important thing is understanding the facts and consequences of each option so you can make an informed decision based on your circumstances and your long term financial goals.And because this is Dollars & Distractions, we somehow also find time to discuss appreciating versus depreciating assets, expensive cars, windscreen washer fluid and why having a husband who fills your car with fuel might be the ultimate love language. 😂In This EpisodeWe chat about:Should you pay off debt or save your money?Should you pay off your mortgage or invest?Offset accounts versus making extra home loan repaymentsPaying off credit cards and personal loansHow debt can affect your home loan borrowing capacityInvesting in shares, property and other assetsUnderstanding your personal risk appetiteSuperannuation and thinking about retirementAppreciating versus depreciating assetsBalancing financial decisions with emotional decisionsWhy your long term financial goals should guide your choicesImportant: Everything discussed in this episode is general information and opinion only and is not financial advice. Everyone’s circumstances are different. Consider speaking with the appropriate qualified professionals before making financial, taxation or investment decisions.More money, more mindset, with plenty of distractions along the way.Suggested SEO Keywordspay off debt or save, pay off mortgage or invest, what to do with extra money, should I pay off debt or invest, mortgage offset account, extra mortgage repayments, investing extra money, paying off credit card debt, personal finance Australia, financial goals Australia, superannuation Australia, home loan offset account, building wealth Australia, Dollars and Distractions podcast