Answers is run by hippocrites
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Pay off your debt before you invest. |
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Melissa
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Pay off your debt first. With the money you save from the monthly payments that you won't be making, invest in money market accounts and such. PAY OFF YOUR DEBT! |
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Obi-Wan Kenobi
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Well, looks like there is NOT agreement in what I'm reading by all the responses.
But here's my take. In the current interest rate environment, you could do better than 4.5% in low risk investments. Fidelity and Vanguard have bond funds consistently yielding 6-7%. The 4.5% might translate into a 6% after tax rate, which puts you right in break even territory.
I think it boils down to just how much debt you have. If you're fine with what debt you have and can afford some risk for a better return, better to explore the market. If you have other debt besides this and the load is a bit much, I would retire the debt (and payment).
Hope that helps! |
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SimpleMoneyGuy
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Looks like there is agreement. Why, because when you pay off debt, you get a real return immediately - In your case 4.5%.
Let's say you decided to invest instead - well you still have to come up with the monthly payments - then your 'investment' has to return more than 4.5% net after taxes. So depending on your tax rate - you may need to earn considerably more than 4.5%!
Paying off the debt, then means you have whatever payment you were making, available for investments - a lot easier.
Paying off debt as early as you can is Simply the best AND surest way of locking in a gain.
Good Luck! |
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NONAME
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That all depends on if your confident you can achieve a higher rate of return that 4.5% with your investments. Depends a lot on what country your in if your thinking of investing in property. Personally I'd clear my debts. |
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tiff_ko
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1ST-PAY OFF YOUR DEBT
2nd-after 1st paying off your debt, it will help your credit score, since you've paid it off, then start again, with no debt, thus over time, successfully improving your credit score!!!! |
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>>>>>>>
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pay off the debt then worry about investing |
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chuck_jax
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Fod is correct. It depends on your ability to get better than 4.5% return on your money...really it is higher than that. Because you will have to pay tax on the gain from your investment, you really need to get better than about 5.5% ROI. This will cover the taxes and net you the 4.5%.
This also assumes that the 4.5% you are paying is not tax-deductable. |
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Thin Kaboudit
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Pay off your debt. It's the very best investment you can make. |
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rb_cubed
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Pay off the debt. Why should you spend money paying someone else for using your money. Put the amount of interest payments you would have paid into an investment account. |
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prs
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I disagree with those who say pay off the debt...it's all about opportunity cost, paying off the debt instead of investing cash with a higher equivalent rate of return will net you less in the end. If the interest rate on the debt is flexible then the direction of interest rates must also be considered. |
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tharedhead ((debajo del ombú))
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Pay off your debt. If you decide later that you would like to make additional purchases on credit, you can continue to improve your credit by paying it off again. |
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