First of all, clear your debts.

The obvious reason for doing this is that with debt your account or bank balance is in a negative state and you have to pay back that loan eventually so you may as well start paying it back now.

Also, if you have debt against your name, then you may be restricted from conducting some financial transactions or at the least you may be penalised with those transactions.

For example, if you already carry some debt, you may find it difficult to obtain a credit card or be refused a mortgage or if you want to borrow more, then the terms may be very unfavourable to you.

Another reason why you should clear your debts is because most loans require you to pay interest. For every pound or dollar of debt you have left outstanding you have to pay interest until that debt is cleared. So clearing off your debt will actually save you money in the long run.

If you are unable to clear your debts then do not consider investing just yet. This is because the returns that you may receive from investing may be less than the interest you are paying on your loans. So you will become worse off !

Also, investing carries a degree of risk – the value of your investments will go up and down over time, so you may end up with less than you started with at any random point in time. The last thing you need when in debt is to be forced to cash in your investments at a loss.

So, before you begin to invest, clear your debts.
Being debt-free puts you into a very strong financial position and is the first step towards financial freedom.

Whatever your debt is, make a plan to pay it back and then actually start paying it back !