Why I don’ pay off Debt early

Short post why I don’t pay off our debt early and invest money.

First, off our financial liabilities are cheap. Leasing has 2,05% Student loan 1,85% and Mortgage 1,65%, while my investments make on average 5% and I can get that return quitr safe with T or MO and even more with some REITs.

Second, even if going for lower yield investments like MMM, CSCO or JNJ with post tax yield in range of 1,5-2,5%, still I would go for one practical reason – if something bad will happin I will have money, less if share prices at the bottom, but still something at hand in case of really bad situation. But if I pay-off my debts early banks will never lend me back the money that I repaid in advance.

4 thoughts on “Why I don’ pay off Debt early

Add yours

  1. This is a question that gets asked a lot. Glad you were able to come to a conclusion that works for you P2035.

    I struggle with this decision constantly. When I first had my mortgage, with a 3.5% interest rate, I thought that I could earn more in the stock market and so I chose not to try to pay it off early. Now, I’ve since changed my mind because it would be nice to not have to worry about debt.

    The global pandemic has also put things into perspective. Companies are declaring bankruptcies because they couldn’t survive a few weeks to a few months in this environment. I’m sure if they didn’t have debt, they would have been fine.

    Not all debt is bad. I actually just bought a condo and the goal is to have that condo generate enough income to service the debt and then some. But this decision is a highly personal one. For me, I’m about to buy furniture and so I will have the following debts: furniture, car loan, student loans and two mortgages. Over the next 2-3 years, I want to get rid of the following debts: furniture, car loan, and student loans.

    My student loan is around 2%. Car loan is 4%. Furniture will be at 0% for a year. I probably could make more in the market, but once those debts are gone, then I’ll have more money to invest. I just refinanced my mortgage to a 3.0% interest rate and I want to get rid of that in 15 years.

    The other mortgage is going to have an interest rate of around 5% and I want to get rid of that in 15-20 years.

    Paying off debt early or not is neither always good nor bad. It’s just a personal decision that each of us will have to make. Good luck P2035.

    Liked by 1 person

    1. Hi DP. Yes with 3% its a hard call. But also consider that if needed bank will not lend you back early repaid money in case of something bad, while you will have possibility to sale shares and get the money. Also your case with condo you got your equity with shares. If you repaid your debt early, there would be no condo now 😉 Never the less you are righ to repay the 5% loan. Maybe you can have it refinanced cheaper with LIBOR USD around zero.

      Like

      1. I hope to refinance at some point out of that 5%. Also, the goal is to have the tenants pay off the mortgage :).

        I have credit cards and a small emergency fund. If something were to happen, I would use those. But I hear what you’re saying. The other side of the coin is that, once the debt is paid off, if something were to happen, I wouldn’t have that debt obligation anymore.

        Like

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Powered by WordPress.com.

Up ↑

Engineer my Freedom

Financial freedom from Dividend Growth Investing

IÅ¡mok investuoti lÄ—tai ir protingai

Our journey to financial independence

Polliesdividend

Dutch Dividend Engineer

European Dividend Growth Investor

Compounding into freedom - A European perspective

Dividend Compounder

Accumulating Wealth, Slowly But Surely

Broke Investor

My Journey to Financial Independence

www.honestfire.lt/

ATVIRIAUSIAS BLOGAS APIE FINANSINĘ LAISVĘ

One Million Journey

Shaping the Future through Saving & Investing

Total Balance

Ignite your FIRE

Young Dividend

Our journey to financial independence

Generalist Lab

Our journey to financial independence

Passive Canadian Income

Our Journey To Financial Freedom

My Dividend Dynasty

Achieving Financial Independence - Saving, Investing, and Building a Dividend Empire

Dividends Diversify

Our journey to financial independence

The Dividend Guy Blog

Our journey to financial independence

Traveling Lithuania

Traveling Lithuania

Financially free in 10 years

Saving, investing and working towards financial freedom

George's Dividend Meter

Just another WordPress.com site

Dividend Portfolio

A Portfolio For The Small Investor

Engineer my Freedom

Financial freedom from Dividend Growth Investing

IÅ¡mok investuoti lÄ—tai ir protingai

Our journey to financial independence

Polliesdividend

Dutch Dividend Engineer

European Dividend Growth Investor

Compounding into freedom - A European perspective

Dividend Compounder

Accumulating Wealth, Slowly But Surely

Broke Investor

My Journey to Financial Independence

www.honestfire.lt/

ATVIRIAUSIAS BLOGAS APIE FINANSINĘ LAISVĘ

One Million Journey

Shaping the Future through Saving & Investing

Total Balance

Ignite your FIRE

Young Dividend

Our journey to financial independence

%d bloggers like this: