Comments on: Should I Invest or Pay Down Debt – How to Decide http://financialhighway.com/should-i-invest-or-pay-down-debt-%e2%80%93-how-to-decide/ A personal finance blog discussing investments, savings, insurance and financial planning ideas to grow wealth Wed, 10 Mar 2010 19:16:58 -0500 http://wordpress.org/?v=2.9.2 hourly 1 By: Home Finance Tip Blog » Emily’s list: National One-Hit Wonder Day http://financialhighway.com/should-i-invest-or-pay-down-debt-%e2%80%93-how-to-decide/comment-page-1/#comment-1259 Home Finance Tip Blog » Emily’s list: National One-Hit Wonder Day Sat, 26 Sep 2009 09:17:19 +0000 http://financialhighway.com/?p=2895#comment-1259 [...] 8. Financial Highway discusses how to watch whether you should pay soured your debt or invest. [...] [...] 8. Financial Highway discusses how to watch whether you should pay soured your debt or invest. [...]

]]> By: DebtGoal » Blog Archive » The Financial Highway to… Investing or Debt Elimination? http://financialhighway.com/should-i-invest-or-pay-down-debt-%e2%80%93-how-to-decide/comment-page-1/#comment-1252 DebtGoal » Blog Archive » The Financial Highway to… Investing or Debt Elimination? Fri, 25 Sep 2009 16:31:31 +0000 http://financialhighway.com/?p=2895#comment-1252 [...] post on the blog Financial Highway has provoked discussion on some familiar topics these days: whether it is better to invest funds [...] [...] post on the blog Financial Highway has provoked discussion on some familiar topics these days: whether it is better to invest funds [...]

]]> By: DebtGoal http://financialhighway.com/should-i-invest-or-pay-down-debt-%e2%80%93-how-to-decide/comment-page-1/#comment-1251 DebtGoal Fri, 25 Sep 2009 16:23:34 +0000 http://financialhighway.com/?p=2895#comment-1251 In any analysis of whether or not to pay off debt versus invest, it is critical to take into consideration the risk of not being able to pay off debt moving forward. Many are not aware that the risk increases from uncertain interest rates, so those with ARMs or credit card debt need to take extra care. Furthermore, the risk increases when cash flow evaporates, so doing a dead honest estimate of one's job security is key. Modifying these factors is any cushion is savings, or more generally, any personal assets that can be liquidated with short or medium-term notice for "emergency debt paydown". Admittedly, it is difficult to accurately determine whether to invest or pay down debt, so paying down debt is the safer bet -- unless there is already a high chance that ongoing debt payments would be for nothing, e.g. if a home is going to foreclose no matter what. In any analysis of whether or not to pay off debt versus invest, it is critical to take into consideration the risk of not being able to pay off debt moving forward. Many are not aware that the risk increases from uncertain interest rates, so those with ARMs or credit card debt need to take extra care. Furthermore, the risk increases when cash flow evaporates, so doing a dead honest estimate of one’s job security is key. Modifying these factors is any cushion is savings, or more generally, any personal assets that can be liquidated with short or medium-term notice for “emergency debt paydown”. Admittedly, it is difficult to accurately determine whether to invest or pay down debt, so paying down debt is the safer bet — unless there is already a high chance that ongoing debt payments would be for nothing, e.g. if a home is going to foreclose no matter what.

]]> By: Will @ Cheap Date Ideas! http://financialhighway.com/should-i-invest-or-pay-down-debt-%e2%80%93-how-to-decide/comment-page-1/#comment-1250 Will @ Cheap Date Ideas! Fri, 25 Sep 2009 15:47:00 +0000 http://financialhighway.com/?p=2895#comment-1250 Hey Ray, THANK YOU for writing this article. I've closely examined my "money psychology" and while I'm carrying some debt, I'm not comfortable with it ... AT ALL. I've been rather careless in the past and I want to take a disciplined approach to handling my finances till I emerge from it and only then will I want to leverage "other people's money" to invest. In the meantime, I'm building up a small emergency fund to cushion myself from anything that may pop up. The emotions portion of your article really resonated with me. Cheers, Will Hey Ray,

THANK YOU for writing this article. I’ve closely examined my “money psychology” and while I’m carrying some debt, I’m not comfortable with it … AT ALL.

I’ve been rather careless in the past and I want to take a disciplined approach to handling my finances till I emerge from it and only then will I want to leverage “other people’s money” to invest.

In the meantime, I’m building up a small emergency fund to cushion myself from anything that may pop up.

The emotions portion of your article really resonated with me.

Cheers,

Will

]]> By: Simple Weekend Roundup | Simplified Financial Lifestyle http://financialhighway.com/should-i-invest-or-pay-down-debt-%e2%80%93-how-to-decide/comment-page-1/#comment-1245 Simple Weekend Roundup | Simplified Financial Lifestyle Fri, 25 Sep 2009 02:25:33 +0000 http://financialhighway.com/?p=2895#comment-1245 [...] is a common question we all have Should I Invest or Pay Down Debt – How to Decide. Ray @ Financial Highway offers a simple solution to this [...] [...] is a common question we all have Should I Invest or Pay Down Debt – How to Decide. Ray @ Financial Highway offers a simple solution to this [...]

]]> By: Chris http://financialhighway.com/should-i-invest-or-pay-down-debt-%e2%80%93-how-to-decide/comment-page-1/#comment-1242 Chris Thu, 24 Sep 2009 21:03:42 +0000 http://financialhighway.com/?p=2895#comment-1242 Great assessment. It's hardly ever an either-or situation, as a lot of emotions/fears come in to play. The option I went with (as did a number of people I've talked to about this) was to pay down high-interest credit cards at an aggressive rate until they got to a more manageable point, then divert some of that to investing in retirement. While from a mathematical point, it may have made more sense to pay off ALL CC debt first, the fear of waiting too long to start investing was too large for me. Great assessment. It’s hardly ever an either-or situation, as a lot of emotions/fears come in to play.

The option I went with (as did a number of people I’ve talked to about this) was to pay down high-interest credit cards at an aggressive rate until they got to a more manageable point, then divert some of that to investing in retirement.

While from a mathematical point, it may have made more sense to pay off ALL CC debt first, the fear of waiting too long to start investing was too large for me.

]]> By: Ray http://financialhighway.com/should-i-invest-or-pay-down-debt-%e2%80%93-how-to-decide/comment-page-1/#comment-1239 Ray Thu, 24 Sep 2009 16:56:23 +0000 http://financialhighway.com/?p=2895#comment-1239 It's not always an easy choice to make between paying debt (mortgage, student loan) or investing...it depends on many factors but one important factor people leave out often is their emotions...that is what I tried to point out...it's not always just about math....as Paul points out focus is key and it is never too late It’s not always an easy choice to make between paying debt (mortgage, student loan) or investing…it depends on many factors but one important factor people leave out often is their emotions…that is what I tried to point out…it’s not always just about math….as Paul points out focus is key and it is never too late

]]> By: Craig http://financialhighway.com/should-i-invest-or-pay-down-debt-%e2%80%93-how-to-decide/comment-page-1/#comment-1237 Craig Thu, 24 Sep 2009 16:33:32 +0000 http://financialhighway.com/?p=2895#comment-1237 Great way to describe the it all but I think it would make sense to pay off the debt first. Focus on one task and work on that like Paul did and then you can begin to save care free. Great way to describe the it all but I think it would make sense to pay off the debt first. Focus on one task and work on that like Paul did and then you can begin to save care free.

]]> By: Paul @ FiscalGeek http://financialhighway.com/should-i-invest-or-pay-down-debt-%e2%80%93-how-to-decide/comment-page-1/#comment-1236 Paul @ FiscalGeek Thu, 24 Sep 2009 16:31:51 +0000 http://financialhighway.com/?p=2895#comment-1236 Ray I loved how you laid it out, so many times a simple logical approach can keep you from making stupid choices. Had I learned that earlier I'd be a rich man today :-). For me we are heads down debt busting and it works well for us. We're taking advantage of the singular focus and then on to a full fledged emergency fund and then investing for retirement. Ray I loved how you laid it out, so many times a simple logical approach can keep you from making stupid choices. Had I learned that earlier I’d be a rich man today :-) . For me we are heads down debt busting and it works well for us. We’re taking advantage of the singular focus and then on to a full fledged emergency fund and then investing for retirement.

]]> By: Retirement Savior http://financialhighway.com/should-i-invest-or-pay-down-debt-%e2%80%93-how-to-decide/comment-page-1/#comment-1235 Retirement Savior Thu, 24 Sep 2009 13:53:24 +0000 http://financialhighway.com/?p=2895#comment-1235 I think that's a great analogy. And if you are thinking about your finances the same way you would run a business, then you are analyzing whether your expected returns are a significant margin above your cost of capital (your current debt load). I think that’s a great analogy. And if you are thinking about your finances the same way you would run a business, then you are analyzing whether your expected returns are a significant margin above your cost of capital (your current debt load).

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