After years of making extra payments and trying to get out of debt, it’s tough to get used to the idea of carrying debt again.
So, long story short, my siblings and I inherited my parents’ house, and I took on the job of paying off the solar panels. I didn’t have enough to pay the balance in full (maybe half) so I just paid extra principal every month. Anyway, several years later, it finally dawned on me that the money I had invested had grown to more than the balance on the loan. The loan was only at 4% which would be a steal in today’s economy, but I was so debt averse that I was paying extra on it instead of investing that money.
So now I just pay the bare minimum on it. Heck, even a money market would give me a better return.
I’m also debt averse after 20 years of paying off student loans, car loans, and periodic credit card debt. At this point, if I had enough money in my brokerage account to pay off my mortgage, I would probably do so, even though the interest rate is low.
Also, be sure to include taxes when comparing rates. For example, last year I took a loan to buy a car at 5% interest and was also receiving 5% interest on cash in my brokerage account. It looks like a wash, but I have to pay tax on the the money market interest, so I was actually better off paying off the loan (which I did last week).
After years of making extra payments and trying to get out of debt, it’s tough to get used to the idea of carrying debt again.
So, long story short, my siblings and I inherited my parents’ house, and I took on the job of paying off the solar panels. I didn’t have enough to pay the balance in full (maybe half) so I just paid extra principal every month. Anyway, several years later, it finally dawned on me that the money I had invested had grown to more than the balance on the loan. The loan was only at 4% which would be a steal in today’s economy, but I was so debt averse that I was paying extra on it instead of investing that money.
So now I just pay the bare minimum on it. Heck, even a money market would give me a better return.
I’m also debt averse after 20 years of paying off student loans, car loans, and periodic credit card debt. At this point, if I had enough money in my brokerage account to pay off my mortgage, I would probably do so, even though the interest rate is low.
Also, be sure to include taxes when comparing rates. For example, last year I took a loan to buy a car at 5% interest and was also receiving 5% interest on cash in my brokerage account. It looks like a wash, but I have to pay tax on the the money market interest, so I was actually better off paying off the loan (which I did last week).