I am the same person(
I am the same person(
People get all emotional about this topic (whether to pay off debt or invest), and yet it is a straightforward math problem. If your expected return is higher than your debt interest rate, then you should invest, and I would argue that the right move here is to save for retirement.
Two caveats -- you can't do either without excess cash flow - you need to first be able to cover your living expenses before you do either.
And, for some, being debt-free has value. But, paying the debt makes you less liquid than saving for retirement, because in theory, you can take your retirement savings early (but don't!).
Some lessons to you young guns from an old guy:
1 - Don't go into college debt at a level that exceeds what you expect to make in your first year in a job. Gonna get a $50K job? Then it is okay to get $50K in college debt, but no more.
2 - Get saving into your retirement plan IMMEDIATELY after college, even if that means you have to make hard choices in how to get by for awhile. Make this a huge priority. Trust me, if you save the max in retirement, put it in a target date fund, and stay employed, you are probably going to be able to retire by 60 while you watch all your friends work for another 15 years.
3 - After college, don't go into debt for anything other than a house, and even then, don't buy too much house. That McMansion will have a way of taking over your life in more ways than you can imagine. Too many people work all week to afford a house that they spend all their free time maintaining. That house owns you!
4 - Partner up with someone who has this same financial outlook. Probably the worst financial decision you can make is marrying the wrong person.
5 - Be mindful about all spending. Be sure that everything you buy actually adds value to your life, and then go ahead and buy it and enjoy it.
6 -- Resist the marketing machine. You are a victim of it as much as anyone else. I work in marketing and do you know that the "brand" is the most valuable asset of most consumer companies? Not their product, but the built up value of all the sales and marketing they have done through the years. (That is a nice way of saying that Kia is 90% as nice as that BMW, but costs 1/3rd as much.
And I want to say thanks to this for helping me with all my problems that I am currently have!
Finance People wrote:
Well, the reason I'm going to be buying a condo in 10 months or so is because I need a place for my wife and I to live! And yes, I am looking at some used cars on autotrader to find something a little cheaper. I thought it would be smart to buy a condo rather than getting an apartment. Why rent when I could buy?
This comment was made right before the housing market crash. I wonder what happened to these people.
Colin Sahlman runs 1:45 and Nico Young runs 1:47 in the 800m tonight at the Desert Heat Classic
Molly Seidel Fails To Debut As An Ultra Runner After Running A Road Marathon The Week Before
Megan Keith (14:43) DESTROYS Parker Valby's 5000 PB in Shanghai
Hallowed sub-16 barrier finally falls - 3 teams led by Villanova's 15:51.91 do it at Penn Relays!!!
Need female opinions: I’m dating a woman that is very sexual with me in public. Any tips/insight?