Hi everybody,
This was a question on another forum. A whopping 72% have voted pay off debts!
Such a different mindset. Please note that most of the Forumites on that forum are based in North America.
Here was the question:
Since this is nearly a daily question on the forum, I'd like to get a barometer as to where the majority lies on this question. Selfishly I'd also like to just provide a link to this poll every single time the question is asked so I can stop answering it. Obviously there are many variables that could effect your decision including:
1) Fixed or variable interest?
2) How high is the interest rate?
3) Is it tax deductible?
4) Do you get a company match on your 401k?
5) Are you maxing out your 401k?
6) What is your tax bracket?
7) How long until you retire?
8) How long until the debt will mature?
9) Is the stock market, AHEM, overvalued (just joking, ignore this one)?
Well I want you to ignore all that crap because there are just too many variables. Just assume it's not a hair on fire credit card type situation, and everything else is within the range where a reasonable person would ask themselves this question.
I'm going to delay my vote a bit so I can see what others think, but if you've been around a while you likely have a good idea where I stand.
So which camp are you in?
http://forum.mrmoneymustache.com/as...-this-with-a-vote-invest-or-payoff-debts/100/
This was my reply (after noting 72% of respondents voted pay off debt):
Interesting thread. I'm been reading another forum (this one!) for a few years catering to property investors and I'm sure their responses would be completely the other way! I think that way too, I consider myself an investor but then again, I don't have consumer debt except for a home loan and that debt isn't very big, and the house value basically has almost doubled the 7 years we have lived here. So not a bad investment at all. I say invest!! Damn partner is very cautious. Not an investor. He's cost me big bucks...
You have to invest to make the big bucks. Use other people's money (OPM). Invest, leverage, take the equity increases when property prices go up. And even if they don't, you still have regular money coming in from rents.
Agree though, anybody with revolving credit card debt at typical credit card interest rates is stupid. I currently work for Australia's biggest bank, (It's the highest value company on the Australian Stock Exchange btw, extremely profitable) and previously worked at Amex for 6 years. Don't borrow money for consumer goods. Don't finance them.
If you don't understand the power of investing, play Robert Kyosaki 's cashflow 101 a couple of times. The take home message i get from the game is, it's ok to borrow money, have debt, but do it to make you money in the long run.
This was a question on another forum. A whopping 72% have voted pay off debts!
Such a different mindset. Please note that most of the Forumites on that forum are based in North America.
Here was the question:
Since this is nearly a daily question on the forum, I'd like to get a barometer as to where the majority lies on this question. Selfishly I'd also like to just provide a link to this poll every single time the question is asked so I can stop answering it. Obviously there are many variables that could effect your decision including:
1) Fixed or variable interest?
2) How high is the interest rate?
3) Is it tax deductible?
4) Do you get a company match on your 401k?
5) Are you maxing out your 401k?
6) What is your tax bracket?
7) How long until you retire?
8) How long until the debt will mature?
9) Is the stock market, AHEM, overvalued (just joking, ignore this one)?
Well I want you to ignore all that crap because there are just too many variables. Just assume it's not a hair on fire credit card type situation, and everything else is within the range where a reasonable person would ask themselves this question.
I'm going to delay my vote a bit so I can see what others think, but if you've been around a while you likely have a good idea where I stand.
So which camp are you in?
http://forum.mrmoneymustache.com/as...-this-with-a-vote-invest-or-payoff-debts/100/
This was my reply (after noting 72% of respondents voted pay off debt):
Interesting thread. I'm been reading another forum (this one!) for a few years catering to property investors and I'm sure their responses would be completely the other way! I think that way too, I consider myself an investor but then again, I don't have consumer debt except for a home loan and that debt isn't very big, and the house value basically has almost doubled the 7 years we have lived here. So not a bad investment at all. I say invest!! Damn partner is very cautious. Not an investor. He's cost me big bucks...
You have to invest to make the big bucks. Use other people's money (OPM). Invest, leverage, take the equity increases when property prices go up. And even if they don't, you still have regular money coming in from rents.
Agree though, anybody with revolving credit card debt at typical credit card interest rates is stupid. I currently work for Australia's biggest bank, (It's the highest value company on the Australian Stock Exchange btw, extremely profitable) and previously worked at Amex for 6 years. Don't borrow money for consumer goods. Don't finance them.
If you don't understand the power of investing, play Robert Kyosaki 's cashflow 101 a couple of times. The take home message i get from the game is, it's ok to borrow money, have debt, but do it to make you money in the long run.
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