scottdye wrote:
Getting rid of the personal debt may or may not be a good idea. If it is a low interest rate and by investing the same amount and earning a better return, he would probably be better off to invest. However, if the interest rate on the debt is high, then obviously paying it off is a good move, equivalent of earning the same return as the interest rate he is paying off.
Playing the interest rate game is a bad game. Even if you have a loan that is at ZERO percent interest, it is still money that you have to pay back, and so this cuts into income that you can do other things with. It's never guaranteed that you can make money by investing, so it's better to get rid of debt. If you have money at zero percent interest and invest it in the hopes of making a big score and then you LOSE on that investment, then you're in bigger trouble.
Investing is just PART of a good financial plan.
1) Get out of debt and stay that way (except for a house).
2) Invest 15% or more into 401k and Roth IRAs or equivalent retirement accounts.
3) Pay off house early.
4) Retire only after you have no debt and own your house outright. (If you opt not to own a house, you must have enough saved to earn enough to handle rent increases over 30 years or however long you think you will live).