Diminishing Your Debt Diminish (di min'ish) – v. to reduce in size. Reducing the size of your debt sounds nice, doesn't it? Sure, but what does that have to do with investing? Everything. Take a look at your next credit card bill. If you're like most Americans you probably carry a modest balance every month. Okay, maybe more than modest. Say you owe $1,500 on your VISA bill. Now look to the section of your bill that says "APR" which stands for annual percentage rate, or the amount of annual interest VISA charges you for carrying a balance. More than likely it's a number between 15 and 20 percent. For this example let's assume it's 19%. That means that in one year you'll pay VISA $285 on top of the $1,500 bill you've racked up.

Now what would you say if someone told you that they had an investment that would guarantee you a 19% return this year. You'd jump at the chance! Well, that's the way to think about paying off your credit debt. Paying off your VISA bill is like earning 19% back on an investment. So instead of putting $1,000 into a mutual fund that might earn you 8%, and still losing 11% between your credit card debt and mutual fund investment, take the money, quickly pay off your balance and then look for investment opportunities that match your financial goals.