Given the fact that money has a principle of time, I would invest the 5000 dollars instead of paying off the debts. The $5000 at hand today is worth more than the same amount tomorrow or years to come. Money has the capability of earning interests ( Muda, & Hasibuan, 2018) . Therefore, the 5000 dollars can gain enough interest that will pay off all my debts in the future. If I invest the $5000 today on a 20% intent for five years, I will not only be earning the interest but also the compound interests of the interest earned. Given the facts that the tax is constant in the next ten years and the inflation rate is low, then investing the money will cause no harm to the outstanding debts.
I would invest in real estate by buying apartments worth $4000. These apartments will be able to earn enough interest in the next ten years. I will be the landlord and rent the houses to residents who will be paying a monthly payment that amounts to $6000 a month. Within a year I will have successfully collected $72000. Out of this amount I can successfully pay out the student loan plus the vehicle debts ( Muda, & Hasibuan, 2018) . I will be able to clear out the debts in 2 years’ time completely. The rest of the years I will be earning the interest plus the compound interest and continue investing in the real estate. The real estate apartments have higher chances of appreciating over time. It will be the best investment I will ever make. This investment will continue appreciating and earning interest over the years.
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In conclusion, I would choose to invest because it has more benefits than just paying off the outstanding debts. Furthermore, the $5000 is not able to clear the outstanding debts at the moment. Paying it all at once makes no sense, but instead would leave me disappointed. Investing the amount at hand will not only pay off all the outstanding debts but also create more wealth in future.
References
Muda, I., & Hasibuan, A. N. (2018). Public Discovery of the Concept of Time Value of Money with Economic Value of Time. In Proceedings of MICoMS 2017 (pp. 251-257). Emerald Publishing Limited.
