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But that's the thing: research and learning are unnecessary. Just change your behavior. Which is easier than people think. Just do it. As far as this card goes
by pbreit 11y ago
But that's the thing: research and learning are unnecessary. Just change your behavior. Which is easier than people think. Just do it.
As far as this card goes, it's spot-on. I would put "pay off your credit cards" at the top of the list. You should not invest a nickel until you've paid off all your credit cards (and any other debt where you're paying more than 10% interest).
- charlesdm 11y agoI doubt the people who have significant credit card debts (and are paying 10% interest p/a) are investing. They're probably spending.
- pbreit 11y agoThere are tons of people who carry credit balances who also have money in stocks, bonds & mutual funds. They don't equate paying off 15% credit card balances with a 20-25% stock gain.
- logfromblammo 11y agoThey may be investing indirectly, like with their 401(k). People with significant credit card balances may be paying 15%, 18%, 25%, or more on them. Even with the tax advantage of the retirement account, it's better to suspend contributions and pay off debt. Assume you're in the 25% tax bracket. If you have a $100 debt accruing interest at 24.99% for 10 years, you end up owing $931. If you have $133 in a pre-tax account earning at 7% for 10 years, and withdraw it and pay 25% in tax on the $262, you have $196 left. You don't have to be a genius to figure out that still leaves you $735 in the hole, which is far worse than paying the tax on your $133 paycheck up front and using the $100 to pay off your debt instead of investing it. As it turns out, your interest on debt doesn't need to be nearly that high. If you owe at 10% and invest pre-25% tax at 7%, it still makes sense to stop investing entirely until paying off the debt.