02-16-2017 Columns

Investing in Your Future


What’s smarter, paying off debts or investing?

If you are just starting out in your career, you will need to be prepared to face some financial challenges along the way – but here is one that is not unpleasant: choosing what to do with some extra disposable income. When this happens, what should you do with the money? Your decisions could make a real difference in your ability to achieve your important financial goals.

Under what circumstances might you receive some “found” money? You could get a year-end bonus from your employer, or a sizable tax refund, or even an inheritance. However the money comes to you, do not let it “slip through your fingers.” Instead, consider these two moves: investing the money or using it to pay off debts. Which of these choices should you pick? There is no one “right” answer, as everyone’s situation is different. But here are a few general considerations:

Distinguish between “good” and “bad” debt. Not all types of debt are created equal. Your mortgage, for example, is probably a “good” form of debt. You are using the loan for a valid purpose – i.e., living in your house – and you likely get a hefty tax deduction for the interest you pay. On the other hand, nondeductible consumer debt that carries a high interest rate might be considered “bad” debt – and this is the debt you might want to reduce or eliminate when you receive some extra money. By doing so, you can free up money to save and invest for retirement or other goals.

Compare making extra mortgage payments vs. investing. Many of us get some psychological benefits by making extra house payments. Yet, when you do have some extra money, putting it toward your house may not be the best move. For one thing, as mentioned above, your mortgage can be considered a “good” type of debt, so you may not need to rush to pay it off. And from an investment standpoint, your home is somewhat “illiquid” – it is not always easy to get money out of it. If you put your extra money into traditional investments, such as stocks and bonds, you may increase your growth potential, and you may gain an income stream through interest payments and dividends.

Consider tax advantages of investing. Apart from your mortgage your other debts likely will not provide you with any tax benefits. But you can get tax advantages by putting money into certain types of investment vehicles, such as a traditional or Roth IRA. When you invest in a traditional IRA, your contributions may be deductible, depending on your income, and your money grows on a tax-deferred basis. (Keep in mind that taxes will be due upon withdrawals, and any withdrawals you make before you reach 59-1/2 may be subject to a 10% IRS penalty.) Roth IRA contributions are not deductible, but your earnings are distributed tax-free, provided you do not take withdrawals until you reach 59-1/2 and you have had your account at least five years.

Clearly, you have got some things to ponder when choosing whether to use “extra” money to pay off debts or invest. Of course, it is not always an “either-or” situation; you may be able to tackle some debts and still invest for the future. In any case, use this money wisely – you were not necessarily counting on it, but you can make it count for you.

This article was written by Edward Jones for use by your local Edward Jones Financial Advisor.

Infant mortality

 Infant mortality is the death of an infant before his or her first birthday.  It is often described as a rate of deaths per 1,000 live births.  Additionally, the infant mortality rate is often used as a barometer to measure the general health of a community.

Infant mortality is a significant problem in Berrien County. Not long ago, Berrien County was ranked as the worst county in the State of Michigan for infant mortality. Since then, the infant death rate has decreased due in part to Berrien County Health Department educational and awareness campaigns and programs. However, infant mortality still remains an issue in Berrien County: between 2012 and 2014 Berrien County had an infant death rate of 7.8 deaths per 1,000 live births which is higher than the Michigan average of 6.9 deaths per 1,000 live births during that same time.

The Berrien County Health Department and the Raising Up Healthy Babies Infant Mortality Reduction taskforce are working to help reduce infant deaths and make sure that more babies are growing up healthy. Some community programs that help prevent infant deaths include home visiting programs like the Nurse-Family Partnership (NFP) program, or Maternal and Infant Health Program (MIHP) which provides mothers and caregivers with the education and tools they need to have healthy babies. Another program, Baby’s Own Bed, provides cribs and safe sleep supplies for families in need.

For more information on any of these programs, call the Berrien County Health Department at (269) 926-7121 or visit us online at www.bchdmi.org and on Facebook at www.facebook.com/bchdmi.