Comments on: Would You Rather… Cash vs Debt Edition

By: J. Money

J. Money — Mon, 16 Apr 2018 13:34:47 +0000

In reply to ClaireElaine. Haha... I like it :) And interesting point on credit too, I don't recall many people answering with that one in mind!

By: ClaireElaine

ClaireElaine — Sun, 15 Apr 2018 07:16:13 +0000

So I haven’t seen anyone say this, but I admit I didn’t read them all extremely carefully. But I would take the $250k both ways. Invest, and pay off in monthly installments for about five years, and then wipe out the debt completely. At that point, I should have a steady income, because it’s not like I’ve been able to live off the interest, since all the interest has been going toward not increasing the debt. BUT, now I ALSO have FIVE YEARS of consistent payments on my credit report. So with steady income and great payment history, if I **had** to take on credit for anything, I could do so at MUCH better interest rates than 8%. So I take all the money I’ve saved from my steady income, invest that at the 8%, and slowly pay off my new loan which is like 4.25% MAX, and now I’m making money. :-)

By: Tessa

Tessa — Fri, 13 Apr 2018 23:35:47 +0000

B for me cz any monies I earned after that would be mine.

By: J. Money

J. Money — Sun, 01 Jan 2017 20:56:40 +0000

In reply to Mross.

it’s good to know yourself well :)

this post here will probably help steer you too:

https://eliteedgemoney.com/2015/03/answer-financial-debates/

By: Mross

Mross — Fri, 30 Dec 2016 18:15:37 +0000

How refreshing! I have been pondering paying down some recent debt vs savings and I am so glad I stumbled upon this discussion. For me, minimizing my debt brings comfort and a bit of anxiety. Hmmm. I’m going to try baby steps towards plan B. I would have to sell my free and clear home and free and clear investment property to clear the slate and that would bother me more than carrying debt. For example 373k net worth minus 78k is heading in the right direction, but I feel better debt free.

By: J. Money

J. Money — Tue, 15 Mar 2016 11:07:07 +0000

In reply to Dr. Beard. Hah! At least you were saving that $15k-$20k vs spending that also! Could have been doubly worse :)

By: Dr. Beard

Dr. Beard — Mon, 14 Mar 2016 08:00:18 +0000

As someone with as much job security as is possible on this planet (tenured college professor), I would go with $0/$0. Springy debt emergency fund here, now. I know I would choose 0/0, because I’ve been in a pretty similar situation. I had a habit of saving up big ass “emergency” funds to the tune of $15-$20k over a year, but then totally not realizing that we’ve also built a nice $10-$15k CC bill. WTF. It was so much more rewarding watching that stack of cash grow than it was watching our spending and, you know, balancing it. It would appear we were doing well saving, when in reality we were just spending as much as I was earning. It took actually calculating how much interest (idiot tax) this was costing me to learn. If that $250k is financed at 8%, and the I MIGHT get 8% on the investment of the other quarter-mill, then I would take the guaranteed return and sacrifice the flexibility.

By: Drew

Drew — Fri, 11 Mar 2016 12:21:06 +0000

I would most definitely take the money and invest. I have been in a smaller scale situation prior i.e. School. Did the so called investment with some debt in order to build my cash flow opportunity. After that I hustled hard to get that debt taken care of so that in the future if another investment opportunity presents itself I in position to pull the trigger. Not scared of debt, but as Warren B. said we should be scared of what we don’t know. So be hesitant of what you don’t know.

By: J. Money

J. Money — Thu, 03 Mar 2016 12:20:21 +0000

In reply to Sarah.

Wow, that is pretty much the same situation haha…

My first instinct (of course) was – “KEEP THAT MONEY! Especially if it’s for emergency stuff!” but I also get wanting to rid the debt once and for all too… The only problem is that if you were to lose your job anytime soon – knock on wood – you can’t go back and take out the $$$ you just used to pay off the car, whereas you still always have that option w/ the cash. So it’s def. a tricky one, but ultimately leads to whichever decision best keeps you feeling comfy :) I always forget there are those middle grounds of doing a little of each, haha.. Good luck!

By: Sarah

Sarah — Wed, 02 Mar 2016 23:26:23 +0000

AGH! I’m struggling with this right now – maybe I’ll blog about it soon and link back to here! As of today, I have about $12k left on my car note.. ..and about $12k in an online savings account, that I consider to be my emergency funds: rainy day fund (“something breaks unexpectedly” kind of bummer) and my sh!tstorm fund (pretty self-explanatory) all in one. I’ve got a decent enough income but only as much job security as anyone has in my industry right now (slim to none) – so I need to keep some savings in case of the worst!
I’ve been paying extra on the loan, but I’m starting to lose interest in keeping it up.. but it’s just not nearly as gratifying watching debt decrease as it is watching cash INCREASE! I’m hoping that by using some of my savings to pay down that car debt faster, it’ll feel better month-to-month saving to watch my cash grow again than it has watching my debt shrink. It’s purely an emotional thing!