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Am I the only one who thinks paying off debt fast isn't always the best move?
I had a conversation with my buddy Dave last year at a coffee shop in Portland. He was dead set on throwing every extra dollar at his student loans, like $800 a month over the minimum. I told him I was doing the opposite, putting that cash into a low cost index fund instead. He said I was being dumb and that debt is an emergency you kill fast. But I showed him my math, how my investments were earning 7% while his loans were at 4.5%. He still thought I was wrong. Has anyone else chosen to invest instead of aggressively paying down low interest debt?
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wyattmitchell3mo ago
I had a 3.2% car loan a few years back and my buddy Tim said I was financially irresponsible for not paying it off in six months. I pointed out my savings account was earning 4.5% at the time and he just stared at me like I was speaking a different language. Some folks get real religious about debt and math doesn't seem to matter.
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davis.diana3mo ago
it's wild how people get so caught up in the "debt is bad" mindset without actually running the numbers lol. I read this article a while back that talked about how a 4.5% savings rate beats a 3.2% loan rate every time, but some folks just can't wrap their heads around it. @wyattmitchell you're not wrong, that's literally free money you'd be losing by paying it off early. Tim needs to take a math class or something lmao.
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