Does paying off all your low interest debt really feel that good?
Does paying off all your low interest debt really feel that good?
It's 2024. Only billionaires and old people have low interest debt.
Objectively you should pay off high interest debt first, but Ramsey runs a fundamentalist financial cult based on feelings instead of logic, so in that context his advice makes sense.
If people thought logically and understood the concept of interest, they would never turn to Ramsey for advice in the first place.
not dave ramsey but he likes the snowball method because it's more of an emotional win to pay off the small debt first
no. what feels good is stacking 0 interest debt and paying it off over years with inflated fiat
my mortgage I took out in 2023 is at 3.1%
that is 3.05 higer than normal in EU
It’s based off Proverbs - “the borrower is slave to the lender”, but he also claims there’s some magical feeling you get once you pay off all debt, even the low interest stuff.
i will say i sleep pretty easy knowing i have no debt
based and 2019pilled
Right? Mine is 3.2% with a principal of $150,000 currently. My payments are obviously low. One of my car's is 5% @ 15k and the other...probably around the same. Somedays I want to take my money and pay off the house but financially it just makes no sense with how much I'm making on it investing.
where do you put the money? btc?
the borrower is slave to the lender
is a landlord
What did Dave Ramsey mean by this?
rent isn't borrowing
No, paying it off feels like shit.
What feels good is not getting stressed by the bills after
Nice work, anon. No point in paying off early in your situation. I have a 30 year at 3.3% and only paid extra until the mortgage insurance disappeared. 187k left and I'm content to pay minimums unless I get a huge windfall or something.
just be logical bro
King Boomer specializes in changing people's retarded behavior that got them into the messes they're in. Smart, logical people don't call into his show, desperate people do. As he says, it's 90% behavior, 10% math. And that's true. He's fully aware of Avalanche/Snowball.
He deals with people who got tricked or didn't look at their spending habits at all and now have massive debts. Cars, credit cards, student loans, "lending" friend and family money.
His whole schtick of it "feeling good" is to motivate idiots that they can get out of debt.
Imagine you're an idiot with the following debts:
$450
$1020
$3256
$79
$3669
Making minimum payments on 3k level debts will feel like nothing, and keeps you trapped because you're "paying your bill" but the number never goes down. Yet all those debts still chip damage you and fuck you long term.
But you pay off the little shitters you forgot about, like a gas bill or shopping, then the damage lessens and you see that it is possible. Over time, you will start feeling good from paying more and seeing the numbers go down or eliminate entirely.
In summary, he preaches Snowball to change idiot behavior with that initial endorphin hit of paying off a small stupid debt.
youre paying someone's mortgage at a marked up rate to borrow your rentoid living quarters. legendary cope anon
btc?
ofc
Animal Crossing taught me that there is no end to suffering.
i mean yeah? i don't know about low interest but every time i pay my debts i feel amazing, the other day i sold a huge stack or rocky when we pumped, payed all my credit cards, and then fucked my wife, i felt like fucking chuck norris, then i bought the rocky dump and started to edge on my seat again, its the best
Does it feel good for non-idiots too? I have about $18,000 left in debt with rates averaging 4.5%. Mathematically I should pay the minimum and invest instead. But if it FEELS really good to not have this debt maybe I reconsider.
implying you're not an idiot
Mathematically it makes more sense to get rid of the debt as fast as possible so that you can refocus those former debt payments into investments.
Not even math, it's logical.
50:50 debt:investment over 10 years
vs
100:0 debt:investment over 10 years
Assuming you take ten years to pay it off using minimum payments 50:50, that is multiple years where your investment power is crippled by a debt payment into something that is not appreciating at all. You are paying your lender for something that's likely losing value.
Other hand, there's not telling how fast the 100:0 method will pay off your debt. The reasoning is that it WILL feel good to see the 18k figure go down. When you start small, then hit milestones, you will want to get rid of the debt faster and faster. So over ten years, 18 months (King Boomer's average time of paying off debt regardless of amount) of non-investment opens you up to 9.5 years of investment opportunity.
If you listen to his show, he has people on for the Debt-Free Scream and most cases they pay off all debt in a shorter timeframe than predicted. Because they started small, saw progress, increased hustle, and got rid of the thing that was ruining actual wealth.
by this logic if i buy a burger am i a mcdonald's debt slave
You return your burgers when you're done?
8.5 years*
this
how about an uber ride then? it's temporary but i pay for a service i need and don't walk away thinking how the system screwed me
Logically this is wrong unless the stock market is giving returns below the interest rate. But that’s usually not the case for low interest debt.
Let’s say a year ago you had $20,000 in cash and $20,000 in debt at 5%. You could pay it all off and have no debt and no cash.
Or you could have invested all of that cash in the stock market. The stock market has gone up 31% in the last year, so you’d now have $26,200. Your debt would have accrued $1,000 in interest, in addition to the $20,000 principal. $26,200 - $1,000 - $20,000 = $5,200 net worth.
$5,200 > $0
And then you could invest that $5,200 and it would be worth $100,000 in a few decades.
The debt would gain 5% remember
Also that example assumes no payments are made on the debt over the year. Since it has interest, it should be deleted soon as possible.
The example is tough to relate to since most people don't just have 20k. People generally apply portions of income over time.
Still, if you got 20k once, you could probably get that again. So why not break free from the debt now? Then you can focus all your money on investing. In the example it's one year, which is not a significant amount of investment time. After another year, you'd have a greater net worth that 5.6k.
His point was that renting out property is not really any different from lending money. In both cases you own capital and lend it for a fee. Money and property are both types of capital so rentiers and creditors are the same capitalist parasites. Making money not by producing goods or services, but simply by owning something - and renting it out to others.
Yeah, that’s the $1,000. 5% of $20,000 is $1,000. And yes I do make that assumption, I have the debt being paid off on day one in the first scenario so no interest.
Still, if you got 20k once, you could probably get that again. So why not break free from the debt now?
Because as I calculated here you’d have more money if you didn’t pay it off immediately.
i am generally against consumer debt. i was completely debt free ~10 years ago. since then ive bought two houses. if you're not an irresponsible idiot using debt wisely is easy mode.
So you don't pay at all during that time? It sounds attractive, and makes me think of something like wage garnishment after 90 days delinquency.
You could invest all that money sure, doesn't that mean the debt is ignored?
Does it even make sense to pay off debt that has an interest rate sub 6% ??
The S&P has been averaging ~10% ROI over the last 20 years, and it should be well established by now that the tools used to combat an economic downturn have the "unfortunate" side-effect that stocks benefits massively. Only way they wouldn't "stimulate" the economy, is in the case of major inflation - which also would be another dream scenario for having debt and being in stocks.
Even stagflation seems less of a risk, because they have moved beyond the 2% inflation target, now seem okay with ~3%..
You pay the minimum they allow you to.
In Sweden we get free uni but we can take out student loans to make life easier while studying. It’s a measly 1k a month on top of a 300 dollar stipend. The interest rate on the loan is so low that literally any coin or stock outperforms it so any student who isn’t a complete retard takes on about 30k in debt but puts it all into stocks to get free money. It’s not amazingly huge but I put 10k of my loan into Bitcoin last year and it’s worth 25 now so I printed 14.xk free money
aside from something large like a mortgage, i hate having open loans. credit card debt is for niggers and i've never really had any since 19 or so
If the interest rate is lower than the rate of inflation and you can pay the minimums then there is no reason to pay off the debt. Also, major inflation is still coming next year. The election doesn't change the hard facts that we are hitting a crisis in 2025 and hopefully Trump's plans will pull us out of it. But for now, ongoing inflation is on the menu which makes low interest debt and assets extremely attractive for the foreseeable future.
Feel good? Yes. I love being debt free. I don't care if the interest is 0%. It's still something to think about when you could otherwise be blissfully not thinking about a debt.
I paid my house off selling eth near the ath. The rate was 4 and an 8th, monthly was 2300.
It was easily one of the best things i ever did financially.