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Paying down debt versus buying more DGI
#11
Jason, good for you and good luck on the 14 year plan.
We are busy paying hard(doubling up) on the front end of a mortgage will probably slow the double as the interest payment drops.3 more $700 payments on the wife's new car, the boys are finished with college (all paid) Have a decent savings acct and still able to put a little money away now and then.
That said, still looking at another 12-15 years to play catch up with stocks and retirement funds.
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#12
(04-02-2015, 02:09 PM)Jimbo Wrote: Jason, good for you and good luck on the 14 year plan.
We are busy paying hard(doubling up) on the front end of a mortgage will probably slow the double as the interest payment drops.3 more $700 payments on the wife's new car, the boys are finished with college (all paid) Have a decent savings acct and still able to put a little money away now and then.
That said, still looking at another 12-15 years to play catch up with stocks and retirement funds.

Thanks Jimbo, I think doubling up is smart. I made one big payment at the end of each year. I would have saved some money if I would of done it your way. Congrat's on putting your kids through college. With what they charge these days that couldn't have been easy.
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#13
(04-02-2015, 02:51 PM)Jason Wrote:
(04-02-2015, 02:09 PM)Jimbo Wrote: Jason, good for you and good luck on the 14 year plan.
We are busy paying hard(doubling up) on the front end of a mortgage will probably slow the double as the interest payment drops.3 more $700 payments on the wife's new car, the boys are finished with college (all paid) Have a decent savings acct and still able to put a little money away now and then.
That said, still looking at another 12-15 years to play catch up with stocks and retirement funds.

Thanks Jimbo, I think doubling up is smart. I made one big payment at the end of each year. I would have saved some money if I would of done it your way. Congrat's on putting your kids through college. With what they charge these days that couldn't have been easy.
LOL, 3 words, Apple since '95.
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#14
(03-10-2015, 09:31 AM)rapidacid Wrote: Good question. Age old question, but good nonetheless.

From a quantitative, common sense, perspective what you laid out is the correct path: pay down if debt interest rate is higher, purchase equities if debt interest rate is low.

But with all of life there's a subjective quality as well: peace of mind. Paying down debt is extremely satisfying and head-clearing. Being debt free, if ever really possible, is the holy grail to clear thinking.

I doubt if you've spent months, years or decades being true to your goals of paying down debt you would immediately go bananas with your spending once you reached the land of No Debt.

Go with what allows you to think more clearly.

Its a question I ponder over on a regular basis.

Rapid raises some good points here. I like the idea of looking at the interest rates and tailoring the debt vs. investment funds appropriately.

While no one knows where we are in the economic cycle, the talk of asset bubbles worries me sometimes, even though I have come a far way to tune out the noise. Nevertheless, the all-time highs, debt loads, and the QE-and-Buyback fueled markets are concerning. A good thing about paying down debt is that it can be viewed as a guaranteed rate of return - as you know exactly how much you are getting for your money's worth when paying down debt.

We bought our house last year and one of the goals I have for this year is to pay down extra on our mortgage dues. This brings our end date closer, currently at 25 years-ish. Unfortunately, here in Canada, we do not have the luxury of getting a tax credit for home mortgage interest payments like the Americans (which Ive heard as an argument for not paying down extra on home mortgages in the US).
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#15
In general it would make sense to me to: pay off highest interest debt first, pay off lowest balance debt next, pay off longest dated, lowest interest rate debt last. Create some kind of emergency fund before paying off any debt.
Alex
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#16
(04-11-2015, 10:00 AM)hendi_alex Wrote: In general it would make sense to me to: pay off highest interest debt first, pay off lowest balance debt next, pay off longest dated, lowest interest rate debt last. Create some kind of emergency fund before paying off any debt.

Alex, that's a unique strategy of those I've read or thought about. Makes sense fiscally and psychologically. Get rid of the biggest sinkhole first, then get a psychological boost by paying off the smallest next. Interesting concept.
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#17
I've always been about paying off debt. The first house, the starter home, it felt GREAT paying that puppy off and I was able to enjoy it all of two months before my wife and I upgraded to our forever home lol. Now, I look at debt differently, sure, any debt other then your mortgage should be paid off, IMHO. Looking back, I would have been so much better off putting the extra money in the stock market, even in taxable accounts, other then paying off that first home. Don't get me wrong, it does feel great being mortgage free but I just feel that there are smarter places to put your money to work for the long term, especially with these interest rates.
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