Yesterday I talked about Uncle Sam paying down his debt. Here are two instructive notes on the subject from much more personal points of view.
From Andy D: “Regarding the pre-payment of loans and such, I have to agree with you. Last summer I came into a nice amount of money — a little more than $50,000. The stock market was hot and my new broker was promising me the moon. This was back in June.
“Instead of putting the entire amount into the market, I paid all of my debts and invested the balance with my broker. At the time I felt that the return on the money used to pay off the debt would be more of a psychological benefit than a monetary one. I had approximately $20,000 in debt at the time. I figure that by paying that off I have avoided paying $1,500 in interest to date.
“In the meantime, I invested $30,000 with my broker in individual stocks. The balance of that account today? $23,500! [Ah, the joys of the full-service broker. — A.T.]
“Besides the better return on my money that I got by paying off my debt [saving $1,500 versus losing $6,500], the peace of mind that comes with being debt free is absolutely amazing. I have a greater sense of freedom than I did when I was in debt, plus the lack of monthly payments has given me an immediate increase in my standard of living. Thanks again.”
And from Michael Logan: “To pay down my student loans, I have done several things to cut back my monthly expenses. I quit my subscription to the New York Times. (This was very painful for me to do). Savings: $40.00 monthly. I got rid of call waiting and caller ID. Savings: $10.50 monthly. I changed my local calling plan (I found out I don’t make many local calls). Savings: $20.00 monthly. Over the next 12 months, this will lead to $846 in savings. I don’t have much else to cut in the way of fat. Now I’m looking at ways to increase my income. Also, I plan to borrow a copy of The Only Investment Guide You’ll Ever Need from a friend. Savings: about $12.00.”
Quote of the Day
The future is disorder. A door like this had cracked open five or six times since we got up on our hind legs. It is the best possible time to be alive, when almost everything you thought you knew is wrong.~Tom Stoppard, Arcadia
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