Should You Invest or Pay Off Debt? The Surprising TRUTH.
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- Опубликовано: 1 июн 2024
- Should you invest or pay off debt? Despite what you might have heard, the answer isn't always so clear cut! Today, we're breaking down the pros and cons of investing vs paying off debt and we're giving you some real life numbers to show whether paying of debt or investing money leads to building wealth faster over time.
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We are Tasha & Joseph a millennial couple balancing kids, jobs, money, and life.
One Big Happy Life is our website which focuses on creating a life you love by finding the right balance between your personal and financial goals.
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Invest or pay off debt, which is better? Share your thoughts! And don't forget to snag your spot in our upcoming free live money mastery class: onebighappylife.com/moneyplan --Tasha+Joseph
How stable is your situation? If it's very stable, invest. If it is not, pay off debt. That may seem counterintuitive, but if stable you can carry debt easier, and we know investing pays off better the longer you are invested. If unstable, having lots of debt can make certain moves impossible and really limits what you can do if you are forced to make a move.
Well said!
Wow Tasha. You are looking like a beautiful modern queen. We need hair, skin, makeup, and style tutorials please.
Agree!! The makeup and colors of her blouse are on fleek!
Agreed her hair is gorgeous!!!
I love that blouse
My focus is paying off debt for the peace of mind. I'm earning a lot of money now but I know that can change. If there is a change in the economy and I lose my job or have to take a lower paying job. I'd rather be in a position where all I have to pay is for the basics: rent, utilities, food, gas. Rather then having to pay for those necessary things and a car, and credit cards and other debts. If things go south I could probably stay afloat with my saving for awhile and without debt it wouldn't be the end of the world if I had to take a lower paying job.
I must say that I was a bit apprehensive when you said paying off debt should not always be the main priority when investing, but when you came with the numbers, I was shocked to see the difference it made. Thank you for sharing unpopular views and backing it up with examples! You guys make very useful content.
We have very similar viewpoints on this. Right now, I’m in rapid debt paydown (not payoff!) mode for all of my debt above 5% after having already built my 6 month emergency fund and investing in my retirement plan up to the match. I’m also making sure I’m enjoying my life along the way! -Akeiva
Yes! An emergency fund is so important for building financial stability.👏👏👏--Tasha
I think it depends on the debt. Credit card debt needs to go.
I agree with this viewpoint for sure ... Debt freedom is often touted as the "status symbol" and does give that psychological boost, but the ultimate goal is financial freedom! My student loan with a balance of $13,800 is sitting at 2% interest. Paying it off is not my main goal. My main goal is building an emergency fund that will sustain me for anything unexpected first and then looking at my total financial picture. Thank you so much for sharing this knowledge! xWBW
Where did you get student loans with only 2% interest?! That's a good decision on your part. On the other hand, even 2% with their $400,000 is $8,000..... debt is pretty scary
You all are saying something new and different in this space. I am HERE FOR IT. Thanks Tasha and Joseph. You have a bright future ahead. I know it.
Feoshia H. Davis I’ve been in large credit card debt with no hopes of ever paying back .but I meet a professional expert Richal Sanders by name she helped me clear my credit card debt and also thought me how to make money online .i want other people to benefit from Richal you can reach her on 1-571-410-7313
Unrelated, but where is your blouse from, Tasha? It’s so pretty!
You don’t technically lose money in the stock market unless you sell at a loss. The value of your shares is what swings but I think people need to understand there is no money gain or loss until you cash out. Once people understand that they are less likely to get scared and cash out at a loss...at least once I saw it that way I understood the power of dollar-cost averaging over several decades is where you can really cash out with big gains.
That is true. We'll make sure to draw attention to that in the future. Maybe it will help. Thanks!-Joseph
Yep! There are two times when the price of stock matters - when you buy and when you sell. I guess there could be a third time if you use your portfolio to secure a loan. Then there are dividends that pile up if you have dividend paying stock, and people forget that part of it.
I think the hard part about this discussion is assuming that there are only two options - pay debt or invest in mutual funds. When there are more options (which would be normal) it makes the choices a lot more complicated! Good discussion of pros and cons! We choose to do both, not one or the other!
Thank you for taking the time to create, and share this video! Also, thank you for breaking things down to help us get a better understanding of the subject matter. I started following you from the TFD, and am so glad I did! : )
I'm all signed up for the Masterclass this Thursday, and am super excited about it? Will we as participants have the ability to ask questions during the class, and or is there a way for ask submit questions prior?
Utility bill is different than major Debt. So I will make sure that everything before I invest anywhere else.Thanks for sharing!
A payment is a payment. People just choose to assign different weight to one over the other. You don't have to have a utility bill. And every utility bill includes profits. We've just normalized on type of expense but not the either.
Thanks. I have been contemplating about this ❤
Wow, this is so GOOD! Thank you so much for making this clear for us! ❤️❤️
Thanks for explaining this, it’s not so easy to understand this, you explained it well
Great video and great perspectives!
You guys have a budget system that is extremely well thought out-less than 35% of the population have any kind of written budget at all. Also your discipline is excellent. If everyone could emulate your behavior I would agree to prioritize investing. I would also agree with maxing out a 401K if possible before you go crazy on your debt. However, if you excess cash after maxing out tax advantaged accounts, I’d consider putting at least half of that into paying debt down faster. There is a difference between paying an electric bill and paying a mortgage-the mortgage will be gone some day and you never have to pay it again and you now have that extra money every month. There is also a great feeling of serenity not having debt, hard to put a price on that.
In short, your way is best IF one has the kind of discipline you have. Also, I’ll assume your incomes are very stable, if you don’t have discipline or stability, pay the debt off.
Really good point about how society views regular monthly bills to other debts.
Extremely helpful thanks guys
Love love love this video! You guys are helping me get over my fear of debt and focus on our wealth! Without making me feel dumb when I question it.
I'm glad to hear it!--Tasha
Acinomnieves3 I’ve been in large credit card debt with no hopes of ever paying back .but I meet a professional expert Richal Sanders by name she helped me clear my credit card debt and also thought me how to make money online .i want other people to benefit from Richal you can reach her on 1-571-410-7313
Very Informative..Thanks..
Thank you so much for this value show😁!
Thank you for sharing this information. It could have been helpful to actually see on the screen all the numbers and maths you talked about it.
considering i graduate in likeeeeee a month or two. this is V important for meeeee tyyyy
Great conclusion! I absolutely agree with the order of 401k matching > high interest debt > retirement savings > remaining debt.
One little change I would probably make is to max out all tax advantaged retirement options (like 401k, Roth, etc) first before focusing on low interest debt - even after hitting your minimum retirement savings.
While generally we are huge fans of maxing out tax-favored accounts, we also recognize that people have different saving and life goals. So if a person hits their minimum savings rate (the savings rate to retire when they want at the lifestyle the want) they shouldn't feel compelled to keep saving for savings sake. They should feel equally comfortable spending that money or putting it towards debt--which ever meshes best with their financial priorities.--Tasha
Really enjoyed this video - it’s something I’ve thought about a lot myself. I agree with your conclusion however something that has been mentioned to me that wasn’t covered was the impact of having a lower debt load when trying to get your home loan. Does that situation change your opinion?
Yes just started interested to hear!! My husband is currently in his 3L year of law school at Notre Dame! So super expensive! But we have no other debts other than that. So in the process of figuring out what house payments and student loan payments make sense. Will see you at the class Wednesday!
Awesome Nicole! Can't wait!--Tasha
This is very useful information to anyone who wants to get ahead.
I'm all signed up for the class and I can't wait!
Yay! See you in a few days!--Tasha
Valerie Ewing I’ve been in large credit card debt with no hopes of ever paying back .but I meet a professional expert Richal Sanders by name she helped me clear my credit card debt and also thought me how to make money online .i want other people to benefit from Richal you can reach her on 1-571-410-7313
Is it better to invest in property or stocks?
Investing is a must
You guys are glowing!!
I don’t think the burden of Debt is just a societal thing. For Christian it’s biblically advised to stay away from Debt. Therefore, When we are in debt we feel the burden Because we step away from biblical advice about going into debt. At least that’s the case for me. That’s the he reason I don’t look at a $200 debt payment the same as a $200 electrical payment.
Remember, just because something is not true for you doesn't mean that it's not true generally. While you feel the biblical burden of debt as your primary source of discomfort when it comes to debt, it is also true that it is a common with the personal finance media to speak negatively about debt, which then causes people to perceive debt in a negative way.--Tasha
I'm a Christian and understand what you mean, but honestly I think that teaching doesn't actually teach what the Bible says. The Bible doesn't say debt is a sin, it doesn't say debt is bad. It does say if you have debt pay it back and to not borrow what you cannot afford. If God wanted it a sin he would have said so. I refuse to have unnecessary, man made guilt put on me when God talks about debt.
One Big Happy Life You asked why don’t we see the electrical bill as the same burden as a debt payment. I answered why I (and many other Christians) didn’t. I didn’t for a second think this applied to everyone and even some other Christians. I was just shedding light on why I personally didn’t. And yes the media does put a negative connotation on Debt ( rightfully so). Just think back to the mid 1900’s Debt was something people were ashamed of (it was the equivalent to having food stamps now). I think we all could agree we would rather not have debt.
Acinomnieves3 "Owe no one anything except to love one another, for he who loves another has fulfilled the law. (Romans 13:8)
Pay to all what is owed to them: taxes to whom taxes are owed, revenue to whom revenue is owed, respect to whom respect is owed, honor to whom honor is owed. (Romans 13:7)
Those are just a few, the Bible does advise you to get out of debt. I’ve never seen it mention as a sin.
@@alishamichelle166 yes I'm familiar with them. Once again I'm not going to put guilt on my heart that isn't necessary. There are many verses discussing how to loan and to pay back what is owed. What wouldn't be Christian is to take on debt you knowingly couldn't pay back, not never having a loan. If it makes you feel better that's fine, but once I realized that people were making me feel bad based on their opinions I decided to not let it rule me.
Can you link the video with the interview you mentioned?
What tools/apps do you use for tracking your spending? I have the budget and I’m filling it in but wonder if you use Mint or something similar
You should use EveryDollar. It works perfectly.
I’m confused about the earning more interest to invest and then something was mentioned about compound interest. (Around 5:00-5:32) I have about $28k in student loans so what does that really mean?
Thanks for laying it out so clearly. My family has lots of debt and little savings, will be sharing this with them. 😊
This is very informative, and I definitely agree that it should be fitted to a person’s individual debts and situation, not the same plan works for everyone.
I do want to say though, I feel like you guys missed a HUGE pro of debt payoff, which is decreased risk. The market on average increases and thats great, but what if you lose your income or get injured? Sure, the emergency fund covers you for a bit, but if the emergency lasts longer, then you’d be in a real tight spot with paying bills AND minimum payments. It would drain savings and investments quickly. I think you guys have an amazing plan in place for yourselves, but you dont have as much risk as there are 3 sources of large income (soon to be 2) plus other smaller streams of revenue. Most people only have one or two, so it’s very risky to keep a lot of debt around.
Also, a question: doesnt the net interest of investments - low interest debt only matter if your total investments are high enough? For example, you have $10,000 in student loans with a 4% final interest rate, so probably around $350 a year on interest in the first year of paying it(considering it goes down with payments). If you have investments earning 8% that year, it would seem like you net 4%, but if your total investments are $2000 that earns $160. So you’re not actually netting any interest until investments are built up.
We addressed risk in terms of liquid assets. The more you have, the more risk you can withstand. Paying off debt decreases your liquid assets which increases the likelihood that you'll need more debt in the future to cover a financial loss.
As for the net calculation, it is about the aggregate financial position. If some of your money is earning more than your debt interest rate, then you're better off. The calculation is asset minus liability paying more debt compared to asset minus liability after investing the money. Whichever has a greater net result is the optimal solution.-J
Love the blouse and earrings!!!
How did you calculate your numbers?
I got back on with Dave Ramsey back in February of this year. I still do the baby steps; I am on Baby Step #1. But I’m investing 1% in my 401k which is not much but a start since I am in my mid 40s.
What about investing vs saving? How much should you have saved before you can comfortably start investing? And what ratio do you advise between the two after you have a 3 mo emergency fund for example? Many thanks. PS: not in the US.
Alina Marinescu I’ve been in large credit card debt with no hopes of ever paying back .but I meet a professional expert Richal Sanders by name she helped me clear my credit card debt and also thought me how to make money online .i want other people to benefit from Richal you can reach her on 1-571-410-7313
My only question is wouldn't it be helpful if you pay off debt in order to have more money per month to put towards our various saving goals? Or are you more saying, pay off debts like credit cards but don't aggressively pay off student loans and mortgages?
I paid off alot of my debts with investment money... got addictive so now I'm in process of trading in my 2014 silverado for a Camry or even a beater lol
Hi, it would be helpful to SEE the math in your case between the 14M vs 10 vs 7. Because we did the math and it helped us pay off debt (rental house debt) after saving max on 401k, hsa, education plan and a fair amount of investing, emergency fund. also with new tax laws do these tax deductions even matter?
If you look at our video about why we don't follow Dave Ramsey, we included charts there that visually represent the same basic calculations we used here. What is it that you are hoping to see from our math? As for whether deductions still matter under the new tax laws, for some people they do, for others they don't. We still take a lot of deductions personally and even more deductions as business owners.--Tasha
I think Tasha/Joseph and Dave Ramsey are actually not that far apart in their views. Tasha/Joseph say to pay off high interest rate debt first - this would include credit card debt, most student loans, personal loans, etc..... and to invest while paying off low interest rates loans (like a home mortgage). Dave Ramsey supports clearing out all debt, except the mortgage first. The he recommends investing at the same time as paying off the mortgage.
The only major thing I can think of that has a low interest rate would be a car loan (if you have good credit) that Dave would say to pay of first, and I guess Tasha/Joseph might argue to pay off slowly and keep investing (not sure of Tasha/Josephs exact recs on this so I don't want to put words in their mouth ?). . Its probably worth noting that a car decreases in value over time substantially, while a home typically increases, so it seems like it might be better to pay that off first.
The high interest rate is the stressfull part. If the interest rate on my loans are over 5%, I think its a way better idea to pay the loan first. The interest rate on my student loans are 6.6% and 7.6% and I am still in school which is why I'm refinancing and prioritizing debt payoff.
Joseph said to pay off debt if the interest rate is over 7% which I was very surprised about. I thought the magic number was 5%. What investments can I invest in that can give me more than a 5% return?
Historically, the stock market has averaged 10% (you'll sometimes also see 7% because that's adjusted for inflation). But keep in mind that this is not a hard and fast rule. It's just a general guideline. It's really important to crunch the numbers and see which works out better in the long term.--Tasha
@@OneBigHappyLife how do you invest in the stock market. The only way I know how to invest is by buying index funds on Robinhood. Are there other ways to invest in the stock market?
Check out our investing videos. They have lots of great information to get you started!--Tasha
You guys look great 💞
Every time I try to sign up for the class, I don’t get the email. (I checked my spam mail)
video on your thought on credit scores
The higher the better.--Tasha
Fit Within Collective I’ve been in large credit card debt with no hopes of ever paying back .but I meet a professional expert Richal Sanders by name she helped me clear my credit card debt and also thought me how to make money online .i want other people to benefit from Richal you can reach her on 1-571-410-7313
I find your content highly insightful. Thank you so much for sharing. I do have a question though: should I save money in the bank for emergency purposes or pay off debt first? I have a personal debt with no interest. I pay a small amount every month, but I wish that I could pay off my debt sooner. Any thoughts, guys? Please respond, if possible. Thanks!
Benjamin P. Ellis Pay off high interest debt like credit card debt first, then save an emergency fund, then retirement savings, then pay off low interest debt.
Note: if you have personal debt with no interest, then economically you shouldn’t pay that off at all. But obviously there’s a personal dimension here that is not really stackable against the economics. Paying off zero interest personal debt should probably be driven primarily by what you agreed upon with the lender. If you said you’ll pay it back at a specific rate you should try to avoid missing that agreement. Otherwise personal relationship harm can be done. If you have spare cash (after paying off high interest debt) you should probably consider putting at least some of that spare cash to paying off personal loans over building an emergency fund and building retirement savings (maybe 25% - 50%, speaking with the lender and making sure they are happy with the amount can ensure that no-one feels exploited)
@@HappilyUnmarriedPodcast Thank you for the great advice. I'll keep up the payments and not grow weary in well doing. Someday the debt will be gone. Thanks again!
I would save an emergency fund first. Dave Ramsey recommends $1,000 to start (mostly because so few people have even that). He recommends that later you increase that to 3-6 months worth of living expenses (whatever that amount is for you personally).
I'm going to be paying off student loans for at least 3-4 yrs, so I personally saved up 6 months of living expenses for emergencies. I keep that amount untouched. I put the rest of my money towards my student loans.
Thank you for the thoughtful words. I'm definitely an advocate of Dave Ramsey's plan.
You mentioned all of your debt has low interest rate in the 3%s... how did you get your student loans that low? I know you guys mentioned the forgiveness program you guys are in which includes public service work... did that change your student loan interest rate?
We do not include the student loan interest rates with our other debts because they are going to be forgiven at this point anyway. When Tasha quits her job, we will pay down her student loans more aggressively because the rate is higher.
Do you have any advice regarding IUL accounts?
Avoid them. Buy term life insurance instead and invest the rest. IUL’s for the most part only benefit the salesperson who sells it (large commissions). It’s a horrible investment vehicle for most people.
you guys rock, and Tasha should open a beauty shop. for real.
When I had my mortgage I would pay extra towards the principal every time I had extra money (after also putting money aside into savings). I was able to cut off so much I would have been paying in interest.
Do you know how much wealth you've forgone because you paid down your mortgage instead of investing?--Tasha
@@OneBigHappyLife I guess I should have mentioned, I have investments as well. Ive had an investment account since I was a kid. + put 20% of every paycheck into my 401k
Really that's still not enough information to go off of in order to decide whether paying off a mortgage instead of saving was the better financial decision. There's so much more. Like, is 20% enough to retire when you want to at the lifestyle you want? And do you have a fully funded emergency fund and carry enough life insurance? All of those things come into play too. --Tasha
@@OneBigHappyLife I wasnt really commenting on which I thought was better, I was just making the statement that I was able to cut off a lot of the interest I would have paid on that mortgage and was happy about that. I wasn't trying to say anything against what you guys teach or anything, I love your videos and the information you present. I feel like I hit a nerve or something. Im sorry If I did. I was just making the comment that I was happy seeing all the interest I was able to cut down by paying a bit more towards my principal payment every month. During that time I still had all my investments, savings accounts, 401k. and 100% agree with saving, but I also liked to pay down my debt because at the time had very high interest rates. I am 100% debt free now and am very comfortable with the rate in which I am saving and the amounts I currently have in my investment/savings accounts. I learned at an early age to save and invest thanks to my dad & grandparents.
You didn't strike a nerve and I'm not sure why you would think that. All of of my questions were pretty normal personal finance questions. My point is that people often make financial decisions off of incomplete information. You mentioned the peace of mind from being debt free and saving on interest. Mortgage interest rates have been below 4.5% for years so it's really surprising to hear that your mortgage had a high interest rate. Perhaps refinancing would have been the better option. What if that cost you millions in net worth over your lifetime and didn't actually do that much to decrease your overall financial risk? That's why we encourage people to crunch the numbers so that they can make a fully informed decision.--Tasha
Can you guys explain this to me but in a lesser English reading level lol. I’m young but I’m interested?
You guys should to a video on Bitcoin!
Looking every bit like Scarlet. 🥰
Hello from Greece! 😎😘😎😘😎😘
Can you please make a video on buying a house with a lot of student loans? 😭
We did one already. Check our how to buy a house playlist.--Tasha
Short answer: don't
@Aegis, that's the wrong answer. Checkout our videos on home buying and investing for all the reasons why.--Tasha
@@OneBigHappyLife Why is it the wrong answer? Just because it's not what she would prefer to hear? The fact is that unless all of that student loan debt bought her a well-paying job, there is no way that she can reasonably pay it off, save for a house, save for retirement, and have a semblance of a life. If she gets a mortgage on top of all that student loan debt, she'll be in debt until she dies. Let's be realistic here...
@@aureate um no. Regardless she will either pay rent or a mortgage. If she doesn't get a mortgage she'll be paying rent for the rest of her life vs a mortgage eventually ends. Lots of people can and do end successfully have student loans and other loans and own a home.
What would you do if you're debt free? I was thinking of getting a higher % savings. Any suggestions?
We are already saving at our minimum savings rate so we'd like spend more for convenience or to buy back time because that's where we would get the most value at this point.--Tasha
@@OneBigHappyLife thanks Tasha! But, i was wondering if you had any advice for a high interest savings account
One big happy life what is your % saving rate that you use?
Thanks for giving me something to think about...I was planning to pay off mortgage in 2 x years but with such a low interest rate it will pay to me max out my 403b instead...
I'd say for that to play with the numbers and see how the 403b is performing and the fees. I have a 403b and it isn't good so I contribute to our ira and my husband uses his 401k since it's better with a match. It might be better emotionally to pay off mortgage if it's only a few years. And it doesn't have to be all or nothing! Maybe you invest a lot and take 3 years to pay off the house? It is still worth it
My car loan is at 14.95% (was a college student with less than a year of credit), and I still owe about $13K. How should I approach this?
Side job and put everything from it toward that
Simple. Sell the car and get a less expensive car that you can pay for in cash.
Refinance it to a lower interest rate.
I see where you guys are coming from. What are your feelings for going into debt? Car loans, mortgages, student loans, etc.
It's up to you how you feel about it based on your own personal goals! Want a car loan? That's fine, just be wise about the payment and interest and understand its impact on what you want to do.
A debt payment is more stressful than the electric bill because if I was debt free, I’d still have to pay my electric bill and that money for the debt payment could go toward wealth building plans. debt payments also include interest payments which my electric bill does not have. I didn’t understand how that was a point in this video.
Your electric bill has plenty of profit built into it. That's all interest is. Profit. It's just that one you know about upfront and the other is hidden. The point is that you have accepted paying your electric bill (and their profits) for the rest of your life even though you could eliminate it if you want to. You choose not to feel stressed about about lifetime payment and you choose to feel stressed about a temporary payment.--Tasha
One Big Happy Life One cannot live in this modern society without electricity. One can live without debt, is that not were the stress comes from? I don’t see the comparison between a mandatory bill vs a non mandatory bill and I would argue that it’s not society that makes people feel bad about debt, society is begging people to go into debt at every turn. What makes people feel bad about it is the negative effects it has on people’s lives.
I appreciate the way you communicate with your commenters btw, the discussion I see you have on other comments really help.
Jalisa, you don't have to purchase electricity from an electric company. You can generate your own with solar power. Continuing to pay for electricity is a choice. Just like being stressed about debt is a choice. The really issue is that people are not taught how to properly manage their debt or their finances and so they take on way more than they should and regret it. Debt isn't the actual problem. It's only a symptom of the real problems which are (1) poor financial habits or (2) insufficient income--both of which can be fixed once you know what to look for.--Tasha
@@LeesaLilHop you're not focusing on the right thing. Of course debt is a choice. But you're choosing to be more stressed than you need to be about it. It's not inherently good or bad. It's a stress that is more even though it's an option, but something that isn't a choice and always there isn't stressful? I'm choosing not to be stressed about any type of payment and focusing on our wealth building. Don't like debt? Don't have it. Have debt? Don't stop investing to pay it off.
@@OneBigHappyLife
I have to disagree about the electricity generation comment. After working for a utility and as an alternative energy installer, that's not at all a fair comparison. The main things I'll point out are the obvious up front cost, building code issues with being ISOLATED from the grid, and local limitations (solar doesn't make sense everywhere).
The same argument can be said for natural gas, cellular service, internet... these are utility costs. You can't just pop open a utility anytime you want something and don't want to pay an on going expense (unless you're Carnegie, true story). It's the equivalent of saying "let me start my own fire department so I can remove that percent off local taxes."
That's just the reply to your arguement. The difference is purchasing a service that correlates to a need in everyday society in you country. Electricity falls under that. Car payments (and other debt products) don't fall under needs.
People can fairly get stressed about both depending on the financial situation they have. That part is fair.
Overall, stress over debt products is over spending. Stress over needs is drowning. Completely different classes.
what if your interest rate is almost 7%
Tax deductible < tax credit. Not a great reason to keep MY student loans. More in tax and netting positive is fine by me.
There is the guarantee factor (risk) of paying debt vs investing.
I was hoping to hear your take on those aspects.
We will be done extremely soon and have the opportunity to take full year match this year. That plus the markets not doing great this year made debut payoff a completely great idea (in retrospect and in context). Like you said, it's not over. Still have to shore up retirement and get a house. Looking forward to it too!
Idk about the comment about debt being widely percieved as a negative thing. Other than student loans, a lot of people are ok with car loans, credit cards, and mortgages.
Totally disagree that bills = debt payments. To me, is about limits placed on me by others.
Opportunity cost is real. But removing limits is huge to me.
Debt targets are totally easy to measure. Retirement is for sure scarier than paying debt.
Ppl telling you to sell your house to pay student loans are crazy. Yall can afford it. Plus, where would y'all live?
Discussion context. Listen to y'all for a good while now. Maybe I was looking for something else starting the video, but I'd love to discuss the depth of these topics.
Also - I was not able to deduct my student loan interest because i make too much money. I think they make as much or more than I do, so I don't see how they are able to deduct it.
@@arthrodea what is the cap for student loan interest deductions? I'm not sure I've heard that before.
@@arthrodea I see. $2,500 cap on the deduction. Thanks for bringing it up!
@@makerPM If you make less than $65,000 you can deduct student loan interest up to the cap of $2,500.
If you make more than $80,000 per year (single person) or $165,000 for married filing jointly, you cannot deduct ANY student loan interest.
Between 65K to 80K the deductions is slowly reduced until its phased out at 80K.
So basically, the student loan interest deduction at best would save you a deduction of $2,500 off your taxable income ..... if you are in a 25% income bracket in taxes, you would be saving about $625. Really not a great deduction.
Planing to stop my retirement and pay off my home 600 in principle a month is good. Should I?
You guys are good
I have two kids and a daughter-in-law that are medical doctors with the typical debt. Ages 27 and 25. How would you two recommend me suggesting to them about these things? I sent this video to them and asked them to check it out. I don't want to be nagging but I know they need to get busy.
You will thank me for this.
Tasha you look beautiful 😍
What interest rate is your debt at?
Your analysis is totally correct but the tax reason what incorrect on the mathematics
Pretty blouse Tasha!
Thank you!
That boy look like Justin Timberlake
1. Your electric bill does not come with a interest rate 2.Out side or your house payment you can easily avoid debt 3.it is easier to invest when have less money going out 4.Interest should work for you not against you 7% on a debt is still 7 cents of each dollar that you owe. Does are facts
1. Your electric bill absolutely does have an interest rate (aka business profits). It's just baked into your payment so you have no idea how much profit the electric company is actually making off of you. At least with an interest rate you know it up front. 2. Just because debt can be easily avoided doesn't mean that it follows that it should be avoided or is bad. 3. It is certainly easier to invest when you have more discretionary income, but delaying investing means that you have to come up with more money to reach the same goals. Instead of defaulting to debt payoff, the better option is the crunch the numbers and see which course of action builds wealth faster. 4. We mentioned scenarios where it would be worth paying that 7%--specifically when you have an employer match. So you are paying 7% but you are earning 100%.--Tasha
@@OneBigHappyLife Interest if it's not working for you it's working against you debt is not a good thing If you get into debt it's best to pay it off and then start saving because that same money you where paying towards that debt you can put that with more money and throwing it at your savings and also your investment. Their is no such thing as good debt
Interest can work for you. As we explained in the video, it's often worth paying low interest so that you can invest and earn a higher interest rate. That's just math. As for there being no such thing as good debt, that's just false.--Tasha
@@OneBigHappyLife but your still spending your money and time paying off someone over time because it's a lower interest rate just pay them as fast as you can so you can keep your money what's the point of really keeping debt in your life
Because you can have more money by investing that money instead of using it to pay of low interest debt.--Tasha
Electric bill is not a worry because everyone has to pay it. Buying a car is optional. Buying two cars is optional. If I don't have two cars I don't have that payment responsibility. Big difference
You don't have to have electricity and you don't have to pay for public electricity either. That's a choice.
@@OneBigHappyLife That doesn't make sense. Electricity is a utility among common people and it's a given cost just like food because you need light, refrigerator and other appliances. Why don't you turn off your electricity today and see how long you can last. As for a car, there are alternatives that won't be as painful or inconvenient like bus, Uber, bike, walk.
You absolutely can live with out electricity, it's just more convenient not to. Having said that, it's entirely possible to not pay someone else for electricity. Many people live off the grid and use solar, wind, or geothermal power.
@@OneBigHappyLife You just contradicted yourself. These alternative power sources requires investment in solar panels and other equipment which can take years or decades to pay itself off. As for living outside the grid, sure why not but the majority live within it. Your argument is basically some people have won the jackpot in the lottery but the reality is 99.9999% don't win anything.
No, I didn't. I said that you can live without electricity (the equivalent to walking as a free alternative to purchasing a car). And I said that there are alternative energy sources that will allow you to stop paying for electricity (the equivalent of buying a bike and paying for public transportation as an alternative to buying a car).
I'm debt free and I invest. However if I was in debt I would pay of debt first because I'm guranteed a tax free return by saving interest, investing is taxed and I make some good investments and some bad investments I dont want to be leveraged if I make a bad investments.
Until the coronavirus hit and all these dept are still coming and your investments plummet
Are the debts still coming though? Or is every financial institution bending over backwards to help people create a workout plan?🤔