Comments on: Should I Invest While Still In Debt? http://www.debtfreeadventure.com/should-i-invest-while-still-in-debt/ Debt Credit & Personal Finance | Bible Help Sat, 20 Mar 2010 01:16:31 +0000 http://wordpress.org/?v=2.9.2 hourly 1 By: Lending Club | Free Investment Sign Up Bonushttp://www.debtfreeadventure.com/should-i-invest-while-still-in-debt/#comment-5012 Lending Club | Free Investment Sign Up Bonus Tue, 08 Dec 2009 12:11:56 +0000 http://www.debtfreeadventure.com/?p=2296#comment-5012 [...] I would not invest while still in debt, but since they gave me $50 to get started I will just using the free money to get my feet wet and [...] [...] I would not invest while still in debt, but since they gave me $50 to get started I will just using the free money to get my feet wet and [...]

]]> By: Pushing Credit Card Reforms | Debt Free Mehttp://www.debtfreeadventure.com/should-i-invest-while-still-in-debt/#comment-4972 Pushing Credit Card Reforms | Debt Free Me Mon, 07 Dec 2009 21:45:39 +0000 http://www.debtfreeadventure.com/?p=2296#comment-4972 [...] Should I Invest While Still In Debt? [...] [...] Should I Invest While Still In Debt? [...]

]]> By: Interest Paid: How Much Debt Costs Spreadsheet | Debt Free Mehttp://www.debtfreeadventure.com/should-i-invest-while-still-in-debt/#comment-4964 Interest Paid: How Much Debt Costs Spreadsheet | Debt Free Me Mon, 07 Dec 2009 21:42:17 +0000 http://www.debtfreeadventure.com/?p=2296#comment-4964 [...] Should I Invest While Still In Debt? [...] [...] Should I Invest While Still In Debt? [...]

]]> By: Pay off debt or invest?http://www.debtfreeadventure.com/should-i-invest-while-still-in-debt/#comment-2751 Pay off debt or invest? Fri, 09 Oct 2009 08:03:07 +0000 http://www.debtfreeadventure.com/?p=2296#comment-2751 [...] Jabs from Debt Free Adventure: Should I invest while still in debt? Investing while still in debt is usually not a wise strategy because it is likely that you are [...] [...] Jabs from Debt Free Adventure: Should I invest while still in debt? Investing while still in debt is usually not a wise strategy because it is likely that you are [...]

]]> By: Matt Jabshttp://www.debtfreeadventure.com/should-i-invest-while-still-in-debt/#comment-2704 Matt Jabs Wed, 07 Oct 2009 04:49:14 +0000 http://www.debtfreeadventure.com/?p=2296#comment-2704 @Joe & Adam: good info guys. Per Joe's last statement regarding mortgage payoff - I would accelerate. Why? Because it is never a bad thing to have no debt. If you choose instead to invest more rather than accel mort payments then you are assuming employment into the future... which is a gamble.Paying off the house is paying off the house - anyway you slice it. @Joe & Adam: good info guys. Per Joe’s last statement regarding mortgage payoff – I would accelerate. Why? Because it is never a bad thing to have no debt. If you choose instead to invest more rather than accel mort payments then you are assuming employment into the future… which is a gamble.

Paying off the house is paying off the house – anyway you slice it.

]]> By: Matt Jabshttp://www.debtfreeadventure.com/should-i-invest-while-still-in-debt/#comment-2703 Matt Jabs Wed, 07 Oct 2009 04:42:36 +0000 http://www.debtfreeadventure.com/?p=2296#comment-2703 Good stuff Mike - I cannot hardly believe you will ever regret that decision. Getting rid of debt is never a bad idea. Good stuff Mike – I cannot hardly believe you will ever regret that decision. Getting rid of debt is never a bad idea.

]]> By: Matt Jabshttp://www.debtfreeadventure.com/should-i-invest-while-still-in-debt/#comment-2702 Matt Jabs Wed, 07 Oct 2009 04:37:36 +0000 http://www.debtfreeadventure.com/?p=2296#comment-2702 Not necessarily because it is likely that in this event my earning power will also take a dive. Not necessarily because it is likely that in this event my earning power will also take a dive.

]]> By: Matt Jabshttp://www.debtfreeadventure.com/should-i-invest-while-still-in-debt/#comment-2700 Matt Jabs Wed, 07 Oct 2009 04:30:15 +0000 http://www.debtfreeadventure.com/?p=2296#comment-2700 Exactly... Exactly…

]]> By: Matt Jabshttp://www.debtfreeadventure.com/should-i-invest-while-still-in-debt/#comment-2699 Matt Jabs Wed, 07 Oct 2009 04:29:01 +0000 http://www.debtfreeadventure.com/?p=2296#comment-2699 My next debt to tackle after my Lending Club loan is paid off is the 2nd mortgage. It sits at a pretty high rate and I am looking to pay it off within the next 2 years - 3 tops. Then I will go after my student loan, etc, etc, etc. My next debt to tackle after my Lending Club loan is paid off is the 2nd mortgage. It sits at a pretty high rate and I am looking to pay it off within the next 2 years – 3 tops. Then I will go after my student loan, etc, etc, etc.

]]> By: Should I Invest While Still in Debt? | CreditLendingBlog.comhttp://www.debtfreeadventure.com/should-i-invest-while-still-in-debt/#comment-2650 Should I Invest While Still in Debt? | CreditLendingBlog.com Sun, 04 Oct 2009 21:31:43 +0000 http://www.debtfreeadventure.com/?p=2296#comment-2650 [...] pointed out that there are certain situations when investing might be a good idea in his post “Should I Invest While Still in Debt?” For example, if you only have low-interest debt such as student loans and mortgage, then it [...] [...] pointed out that there are certain situations when investing might be a good idea in his post “Should I Invest While Still in Debt?” For example, if you only have low-interest debt such as student loans and mortgage, then it [...]

]]> By: Danhttp://www.debtfreeadventure.com/should-i-invest-while-still-in-debt/#comment-2632 Dan Sat, 03 Oct 2009 18:02:31 +0000 http://www.debtfreeadventure.com/?p=2296#comment-2632 a minister of mine years ago offered the suggestion of not buying on credit anything that goes down in value; in his estimation (and I agree) that meant college loans and mortgages...even second mortgagates, if it meant building on the house. But, consumer loans and credit cards, he advised against.I like the "principle" behind it that the loan is only for long-term, to-your-benefit expenses. But, I agree that investments should follow behind debt-reduction. Good information; hope this gets spread far and wide. a minister of mine years ago offered the suggestion of not buying on credit anything that goes down in value; in his estimation (and I agree) that meant college loans and mortgages…even second mortgagates, if it meant building on the house. But, consumer loans and credit cards, he advised against.

I like the “principle” behind it that the loan is only for long-term, to-your-benefit expenses. But, I agree that investments should follow behind debt-reduction. Good information; hope this gets spread far and wide.

]]> By: CreditLendingBloghttp://www.debtfreeadventure.com/should-i-invest-while-still-in-debt/#comment-2631 CreditLendingBlog Sat, 03 Oct 2009 15:25:34 +0000 http://www.debtfreeadventure.com/?p=2296#comment-2631 This is a very helpful post particularly for individuals whose employers match their 401(k) contributions. Helps them get free money. This is a very helpful post particularly for individuals whose employers match their 401(k) contributions. Helps them get free money.

]]> By: JoeTaxpayerhttp://www.debtfreeadventure.com/should-i-invest-while-still-in-debt/#comment-2630 JoeTaxpayer Sat, 03 Oct 2009 14:50:50 +0000 http://www.debtfreeadventure.com/?p=2296#comment-2630 Adam I agree with what you just wrote. Prior, I was caught up on "If you don’t have a positive net increase monthly, then you allocated your funds incorrectly."If one has no debt, and is investing, the goal of never having a monthly loss is tough if you are in stocks to any degree. The sentence I quoted threw me off. Maybe I misunderstood it. I agree that the focus of paying off 10% debt before investing is a no-brainer, one should do it. The next step, choosing between mortgage acceleration or investing is not so clear cut. .-= JoeTaxpayer´s last blog ..<a href="http://feedproxy.google.com/~r/Joetaxpayer/~3/OBk3kQgQqHE/" rel="nofollow">Rest in Peace William Safire</a> =-. Adam I agree with what you just wrote. Prior, I was caught up on “If you don’t have a positive net increase monthly, then you allocated your funds incorrectly.”

If one has no debt, and is investing, the goal of never having a monthly loss is tough if you are in stocks to any degree. The sentence I quoted threw me off. Maybe I misunderstood it. I agree that the focus of paying off 10% debt before investing is a no-brainer, one should do it. The next step, choosing between mortgage acceleration or investing is not so clear cut.
.-= JoeTaxpayer´s last blog ..Rest in Peace William Safire =-.

]]> By: Adamhttp://www.debtfreeadventure.com/should-i-invest-while-still-in-debt/#comment-2626 Adam Sat, 03 Oct 2009 02:09:14 +0000 http://www.debtfreeadventure.com/?p=2296#comment-2626 Hi Joe,I guess that's my point, in a round-a-bout way. Let's say you have $1000 dollars disposable income after all household expenses and loan payments are taken care of. Now you have a choice, either invest it into an investment vehicle of some sort Bond\GIC\Equities\High interest savings etc., this would add to to the asset side of your networth equation. OR you could put it against a debt, Mortgage\LOC\CC\Loan and decrease your liability side of the equation. The question is, which choice will yeild you a better return. If you have a Loan at 10% interest, you will get a 10% return on your $1000 by simply paying that loan down by $1000. If you can only get a 3% return on a GIC\Savings acct etc, it doesn't make sense to invest it into the asset side of the equation. The solution is simple, you get a 10% return by paying down a loan on the liability side.Equities get a little stickier as there is an element of speculation involved in regards to return. Your current loans are absolutes though.Clear as mud? lol. Hi Joe,

I guess that’s my point, in a round-a-bout way. Let’s say you have $1000 dollars disposable income after all household expenses and loan payments are taken care of. Now you have a choice, either invest it into an investment vehicle of some sort Bond\GIC\Equities\High interest savings etc., this would add to to the asset side of your networth equation. OR you could put it against a debt, Mortgage\LOC\CC\Loan and decrease your liability side of the equation. The question is, which choice will yeild you a better return. If you have a Loan at 10% interest, you will get a 10% return on your $1000 by simply paying that loan down by $1000. If you can only get a 3% return on a GIC\Savings acct etc, it doesn’t make sense to invest it into the asset side of the equation. The solution is simple, you get a 10% return by paying down a loan on the liability side.

Equities get a little stickier as there is an element of speculation involved in regards to return. Your current loans are absolutes though.

Clear as mud? lol.

]]> By: JoeTaxpayerhttp://www.debtfreeadventure.com/should-i-invest-while-still-in-debt/#comment-2625 JoeTaxpayer Fri, 02 Oct 2009 21:09:08 +0000 http://www.debtfreeadventure.com/?p=2296#comment-2625 Adam, How exactly would this work? With the cash side yielding nearly zero, to have the stock portion low enough so any decline in a month is compensated by new deposits? That would give me a stock allocation close to zero. What monthly downside do you have to allow for, 10%, 20%? Right now, 10% is about equal to 8 month's pay for us, so the method you propose simply cannot work mathematically while having any realistic mix of stock in one's portfolio later in life. First few years, no issue, but that's when you can afford to be aggressive. Adam,
How exactly would this work? With the cash side yielding nearly zero, to have the stock portion low enough so any decline in a month is compensated by new deposits? That would give me a stock allocation close to zero. What monthly downside do you have to allow for, 10%, 20%? Right now, 10% is about equal to 8 month’s pay for us, so the method you propose simply cannot work mathematically while having any realistic mix of stock in one’s portfolio later in life. First few years, no issue, but that’s when you can afford to be aggressive.

]]> By: Mikehttp://www.debtfreeadventure.com/should-i-invest-while-still-in-debt/#comment-2624 Mike Fri, 02 Oct 2009 20:27:34 +0000 http://www.debtfreeadventure.com/?p=2296#comment-2624 I have several thousand set aside for EF. After a recent revelation, I'm in the process of selling my investments in order to pay off home equity line of credit by summer 2010, then pay off mortgage asap while building the EF further. I have several thousand set aside for EF. After a recent revelation, I’m in the process of selling my investments in order to pay off home equity line of credit by summer 2010, then pay off mortgage asap while building the EF further.

]]> By: Adamhttp://www.debtfreeadventure.com/should-i-invest-while-still-in-debt/#comment-2623 Adam Fri, 02 Oct 2009 20:21:33 +0000 http://www.debtfreeadventure.com/?p=2296#comment-2623 I find the simplest demonstration of this concept is doing up your net worth statement once a month. If you don't have a positive net increase monthly, then you allocated your funds incorrectly. Funds either add to the assets side or they decrease the liability side - or both. The trick is to find the right mixture to maximize your growth.Adam I find the simplest demonstration of this concept is doing up your net worth statement once a month. If you don’t have a positive net increase monthly, then you allocated your funds incorrectly. Funds either add to the assets side or they decrease the liability side – or both. The trick is to find the right mixture to maximize your growth.

Adam

]]> By: Hypatiahttp://www.debtfreeadventure.com/should-i-invest-while-still-in-debt/#comment-2619 Hypatia Fri, 02 Oct 2009 14:05:23 +0000 http://www.debtfreeadventure.com/?p=2296#comment-2619 Matt said: "If the value of the dollar collapses and I have no debt and no investments, it doesn’t affect me. If it collapses and I have debt and investments… my investments are worthless but my debt still stands, and I have lost my earning power."If your debt has a fixed interest rate, don't you benefit by paying with really cheap dollars? Matt said:
“If the value of the dollar collapses and I have no debt and no investments, it doesn’t affect me. If it collapses and I have debt and investments… my investments are worthless but my debt still stands, and I have lost my earning power.”

If your debt has a fixed interest rate, don’t you benefit by paying with really cheap dollars?

]]> By: Colleenhttp://www.debtfreeadventure.com/should-i-invest-while-still-in-debt/#comment-2612 Colleen Fri, 02 Oct 2009 01:54:29 +0000 http://www.debtfreeadventure.com/?p=2296#comment-2612 I'm not trying to say that I disagree with your fundamental point, but I do think that the method you use to get there is fuzzy math at best. I’m not trying to say that I disagree with your fundamental point, but I do think that the method you use to get there is fuzzy math at best.

]]> By: Colleenhttp://www.debtfreeadventure.com/should-i-invest-while-still-in-debt/#comment-2611 Colleen Fri, 02 Oct 2009 01:53:17 +0000 http://www.debtfreeadventure.com/?p=2296#comment-2611 But you are assuming probabilities that are not independent, which is not really knowable. Effectively your 79% number (which cannot be calculated without knowing whether the probabilities are independent are not.) You are effectively assuming that the probabilities are dependent -- that's dangerous, and known as the gambler's fallacy -- if he/she just keeps gambling, he/she has to win eventually. But that's not true. But you are assuming probabilities that are not independent, which is not really knowable. Effectively your 79% number (which cannot be calculated without knowing whether the probabilities are independent are not.) You are effectively assuming that the probabilities are dependent — that’s dangerous, and known as the gambler’s fallacy — if he/she just keeps gambling, he/she has to win eventually. But that’s not true.

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