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The way I see this is, the interest rate on your loans is like a guaranteed negative, compounding return that erodes your net worth. So, by paying down loans wi
by ochoseis 12y ago
The way I see this is, the interest rate on your loans is like a guaranteed negative, compounding return that erodes your net worth. So, by paying down loans with 6% interest, it's akin to putting your money somewhere with a guaranteed 6% return, which sounds more appealing than an uncertain 8% market return.
- nisse72 12y agoIf you have to pay tax on your investment return but can't deduct the cost of your debt, then reducing the 6% debt is more akin to getting a guaranteed return of something like 9% (more or less, depending on tax rates where you live).