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MATH HELP re recent blog post: Loan payoff vs. Invest

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  • Peds
    replied
    congrats. on to bigger things.

    Leave a comment:


  • ChristopherMD20
    replied
    Thank you all for the input and very detailed responses. Again the purpose was to understand the math and approach to analyzing these situations. To hearken back to my poker days, I believe leveraging is the higher EV play. Although I believe that, the boss ( my wife) has spoken therefore we will just lump sum payoff the loan in June .

    Appreciate all the help.

    Leave a comment:


  • AlexxT
    replied





    In the end, it is simple.  If you expect to earn more than your loan by investing, you should invest.  If not, pay down your loan.
    Click to expand...


    I think we can all agree on this.







    Think of it this way.  Take the interest you earn each month from your investment and use it for your loan interest, still paying principal from your cash flow each month.  First month is obv a wash since the principals are the same.  Second month, since investment principal > loan principal, you’re $1.58 to the good on interest,
    Click to expand...


    Exactly!

    You also have to pay down the loan principal.  If you take that from the investment principal ( which you have to do, since money is fungible, it's money that would have otherwise been invested ) then the invested principal also decreases, so you will earn $1.58 less, making it a wash.  I think this is the step that many people miss when doing their calculations.  You have to pay down principal each month, and that has to come from money that would otherwise be invested.  The interest is a wash, and since the loan principal is paid from the investment principal, next month there will be less interest earned, so it will continue to be a wash.

    Because the interest earned is going to pay the interest on the loan, there is no reinvestment, hence no compounding.

    Because the principal used to pay off the loan is being taken from the investment, your principal is going down each period, so next month, you will have less interest earned.  It will exactly match the interest owed, and once again the principal will decrease as you pay down the loan.

    If you take the loan payments from "cash flow", it doesn't help your calculations, because that fungible money would have otherwise also been invested at the same rate.

     


    You also see how little difference it makes in the end.  If you pay the loan with a lump sum which you actually possess at the time, and then “pay yourself back” into an investment what your payment to the loan would have been, you end up with the same but were debt-free and flexible that entire time.  You basically “loaned the money to yourself.”
    Click to expand...


    This is precisely what I was referring to in a previous thread, when I said that it was like loaning money to yourself and expecting to make a profit.   The opportunity cost of those monthly payments on the loan, invested and compounded over time, will equal the amount that you would have gotten by lump sum investing.  All those options are mathematically equivalent.

    In other words, the only benefit to keeping a loan and investing at the same interest rate is possibly behavioral, not financial. Taking out a loan at 5% and investing that money at 5% will not yield a profit over time (assuming taxes are the same).

    Whether behaviorally most people are better off doing one vs the other is another issue.  Also, everyone has to decide for themselves how much of a risk premium they demand over the risk-free return they get from paying down their loans.

    I don't disagree that many physicians should not be in a rush to pay off their 3% mortgages.

    I think that WCI really hit the nail on the head when he pointed out that the posters with a higher net worth tend to extol the virtues of getting rid of those pesky monthly bills by paying off their loans, while the recent grads are more interested in leverage.  Or as WCI also asked, "would you also finance your pencils?".    It's not entirely a financial issue.  At some point, the theoretical advantages of saving a few dollars just isn't worth the hassle.  I pay off my credit cards each month instead of taking  advantage of 0% for 18 month offers, even though in theory  it's worth a few bucks to do the latter.  If I were to buy a new car, I'm not sure I would bother with a 0% loan ( but I might..) .  And even though it might make financial sense, I have no desire to mortgage my paid-off home.   You can consider my extravagance in passing up these opportunities as "luxury goods" ( credit here to WCI as well ).  I will tell you this:  Once all your loans are paid off, and you're debt free, and have a substantial net worth, you won't be in such a rush to take out that mortgage again.  There is substantial pleasure and simplicity in not having to think about all those loans.   Warren Buffet can do the math too, but I doubt that he carries a  mortgage on his house.

    Leave a comment:


  • Donnie
    replied













    I agree that many on here are debt averse, but I think you guys may be going too far. I have seen some specious math on the forum lately. For example, the IRR on paying down your loan is equal to the interest rate. It’s not half or something way less because of compounding. The IRR on debt pay down assumes you can reinvest cash flows freed up by not having to service debt at the equivalent debt return, which shouldn’t be difficult given the low interest rate on debt.

    It’s apples and oranges to say you only need a [25]bps return over 30 years to make it worth it to keep your 5 year loan outstanding rather than pay it down. You need to keep the investment horizons the same to make a comparison.
    Click to expand…


    Yes, those were shown to illustrate how ridiculous the you need x% to beat a loan of y%, and show how powerful compound interest is compared to simple, which many people on this forum still do not fully appreciate.

    That doesnt make sense in reality unless you’re liquidating the account at the time period and ignores the whole upside/opportunity cost side of things, these arent competing capital projects on a similar timescale with a similar rate. The effect is applicable and true, the loan is gone and you havent the savings from that time period could otherwise compound until draw down and they do get to continue to grow no matter what valuation method one applies.

    It makes more sense from a practical standpoint to simply compare the cost of capital vs. expected return/total  at some nominal rate over your investing horizon with the same cash flows/total. Thats how it will effect your long term bottom line. The student loan hero calculator is actually pretty great for seeing this clearly.

    I also agree that as a financial blogger, you have a voice that people listen to and have to be much more careful with what you say and prescribe so to speak. Nuance is tough and hard to know what people will do with the information. Given that we’re mostly physicians we’re probably overly concerned with that aspect but I’d likely have similar canned answers to these kinds of questions publicly on a blog, etc….Here, we’re a subset of a subset and its different, I get the blogger reasons.
    Click to expand…


    I think this post and others are more confusing than helpful.  Here are charts with the actual math showing net worth sensitivity to market returns after 5 years if you have $44,511 of debt and $44,511 in a taxable account.  As folks can see below, the variability in net worth and the upside after 5 years are both greater if you keep the debt, hence the notion that leverage increases risk and return.  If the returns are lower than the interest rate, you would be better off paying down the debt.  Returns compounding on while interest on the loan doesn’t does not mean you should always be borrowing.  The b/e point is the interest rate.  That’s all there is to the analysis.  It’s not complex.
    Click to expand…


    I dont worry about the lump sum situation since it isnt the reality for most asking this question. They are asking for their monthly cash flow that would go to all/some/none of these options. So the basic question becomes can I beat the cost of financing over my investing time line with the extra cash flow? When we’re talking rates of 3%ish and balances of 100k, thats 15kish cost. Doubling payments decreases interest and time to payoff by just better than half the time. I can certainly beat 8k over my investing career with that same cash flow directed to investing if I choose to let the loan stay on term.

    Who cares where you’re better off at in only 5 years? People should be deciding these things with their personal overall goals in mind. I dont really care about the 5 years into the future as much as I do the 20 and 30 years, and thats where acknowledging the different time horizons with respect to a debt and investment makes a big difference. Of course it doesnt mean one should always be in debt or very leveraged.

    At some point in the future, 20-30 years from now when the market has a good year of 10-20%, I will have accumulated enough assets to where that dwarfs total student loan values and much of my contributions, making any hand wringing over whether theyre paid in 3 or 5 years moot. Leave it there long enough and it will take care of itself.

    As far as the OP is concerned, it was such a small amount it didnt matter much at all.
    Click to expand...


    5 year matters because at that point the debt will be paid off.  Starting at 5 years, you will have your assets invested the same way for the next 25 years whether you paid down debt early or not, so the only thing that determines whether paying off debt early was a good idea is net assets after 5 years.

    I think there is some overthinking going on here.  Only the magnitude of the difference changes whether you lump sum or optionally prepay.  Below shows optionally prepaying $1k per year versus investing $1k a year.

    Leave a comment:


  • Zaphod
    replied










    I agree that many on here are debt averse, but I think you guys may be going too far. I have seen some specious math on the forum lately. For example, the IRR on paying down your loan is equal to the interest rate. It’s not half or something way less because of compounding. The IRR on debt pay down assumes you can reinvest cash flows freed up by not having to service debt at the equivalent debt return, which shouldn’t be difficult given the low interest rate on debt.

    It’s apples and oranges to say you only need a [25]bps return over 30 years to make it worth it to keep your 5 year loan outstanding rather than pay it down. You need to keep the investment horizons the same to make a comparison.
    Click to expand…


    Yes, those were shown to illustrate how ridiculous the you need x% to beat a loan of y%, and show how powerful compound interest is compared to simple, which many people on this forum still do not fully appreciate.

    That doesnt make sense in reality unless you’re liquidating the account at the time period and ignores the whole upside/opportunity cost side of things, these arent competing capital projects on a similar timescale with a similar rate. The effect is applicable and true, the loan is gone and you havent the savings from that time period could otherwise compound until draw down and they do get to continue to grow no matter what valuation method one applies.

    It makes more sense from a practical standpoint to simply compare the cost of capital vs. expected return/total  at some nominal rate over your investing horizon with the same cash flows/total. Thats how it will effect your long term bottom line. The student loan hero calculator is actually pretty great for seeing this clearly.

    I also agree that as a financial blogger, you have a voice that people listen to and have to be much more careful with what you say and prescribe so to speak. Nuance is tough and hard to know what people will do with the information. Given that we’re mostly physicians we’re probably overly concerned with that aspect but I’d likely have similar canned answers to these kinds of questions publicly on a blog, etc….Here, we’re a subset of a subset and its different, I get the blogger reasons.
    Click to expand…


    I think this post and others are more confusing than helpful.  Here are charts with the actual math showing net worth sensitivity to market returns after 5 years if you have $44,511 of debt and $44,511 in a taxable account.  As folks can see below, the variability in net worth and the upside after 5 years are both greater if you keep the debt, hence the notion that leverage increases risk and return.  If the returns are lower than the interest rate, you would be better off paying down the debt.  Returns compounding on while interest on the loan doesn’t does not mean you should always be borrowing.  The b/e point is the interest rate.  That’s all there is to the analysis.  It’s not complex.


    Click to expand...


    I dont worry about the lump sum situation since it isnt the reality for most asking this question. They are asking for their monthly cash flow that would go to all/some/none of these options. So the basic question becomes can I beat the cost of financing over my investing time line with the extra cash flow? When we're talking rates of 3%ish and balances of 100k, thats 15kish cost. Doubling payments decreases interest and time to payoff by just better than half the time. I can certainly beat 8k over my investing career with that same cash flow directed to investing if I choose to let the loan stay on term.

    Who cares where you're better off at in only 5 years? People should be deciding these things with their personal overall goals in mind. I dont really care about the 5 years into the future as much as I do the 20 and 30 years, and thats where acknowledging the different time horizons with respect to a debt and investment makes a big difference. Of course it doesnt mean one should always be in debt or very leveraged.

    At some point in the future, 20-30 years from now when the market has a good year of 10-20%, I will have accumulated enough assets to where that dwarfs total student loan values and much of my contributions, making any hand wringing over whether theyre paid in 3 or 5 years moot. Leave it there long enough and it will take care of itself.

    As far as the OP is concerned, it was such a small amount it didnt matter much at all.

    Leave a comment:


  • Donnie
    replied
    I used annual rather than monthly to make things simpler, but it doesn't change the result materially.




    Backwards-engineer what your CAGR would have been on what you left to have earned your finance charges back on what you paid with cash flow on those 60 periods: [($3,169.32 + 44,511) / (44511)] ^ (1/5) – 1 = 1.39%
    Click to expand...


    This is not the right way to think about his problem.  The amount borrowed is decreasing and that's why the CAGR is less than the interest rate.

    What I did accounts for compounding or anything else.  All we care about is the difference in net worth at the end of 5 years.

    Yes, I assume we invest the cash flows that were going to be used to service debt.  Of course investing is preferable to paying off debt and spending the debt service savings, so that problem is not worth analyzing.  Yes, I also assume you can service your debts with new cash, but you could also run the analysis by liquidating your taxable account as necessary to service your debt.

    In the end, it is simple.  If you expect to earn more than your loan by investing, you should invest.  If not, pay down your loan.

    Leave a comment:


  • DMFA
    replied
    We're assuming you have the lump sum all at once.  The amount earning interest is growing.  The amount losing interest is shrinking.  The fixed cost of the finance charges is, well, fixed.  That's how much it costs you to have the money you've got over that same period of time.  What that money that you're holding elsewhere has to do is beat that fixed cost over that period.  That lower compound rate is what it has to earn to beat that.

    I think your math is the tiniest bit off.  Total paid is 60 * pmt(2.74%/12,60,44511) = $47,680.32, or average of $9,536 a year.  Small potatoes.

    Leave the $44,511 in the account and have it earn 2.74% APR over 60 periods = $6,257.50 earned

    Pay the $44,511 debt using cash flow at 2.74% APR over 60 periods = $3,169.32 paid in finance charges

    Figuring in paying back your principal as well, net change by combining the above: gain of $3,358.18

    Backwards-engineer what your CAGR would have been on what you left to have earned your finance charges back on what you paid with cash flow on those 60 periods: [($3,169.32 + 44,511) / (44511)] ^ (1/5) - 1 = 1.39%

    Think of it this way.  Take the interest you earn each month from your investment and use it for your loan interest, still paying principal from your cash flow each month.  First month is obv a wash since the principals are the same.  Second month, since investment principal > loan principal, you're $1.58 to the good on interest, then slowly increasing...do it that way, and you're still up $3,060.70 over those 5 years, or [($3,060.70 + 44,511) / (44511)] ^ (1/5) - 1 = 1.34%.  [It doesn't make practical sense actually to do this: K, let me pull the $101.63 I earned in month 1 on my investment toward my loan interest, and let me put in the $693.04 I'd have paid in principal, etc...obv you're not going to do that.  It's only an illustration.]

    To your point, just like in the amortization schedule, how principal is steadily decreasing thereby accruing less interest, starting from zero yields you with less principal in the beginning, also thereby accruing less interest.  Also it doesn't account for your open-ended compound gains on what you did invest and didn't put toward the loan, but that's not the heart of this argument (but does apply to the real-world use).

    ...obv that only assumes a 1x lump sum paid at the very beginning of the term, and what finance charges you didn't pay and doesn't consider the principal paid into the loan, nor what you could do with the money you no longer have to put toward the loan, esp if you factor in what would have been put into

    If you're starting from zero (i.e. lump sum pay-off) and then DCA in what your payment would have been ($794.67), you'd end up with the same total amount in the end that you'd have paid to the debt (in this instance $51,038.50, though with a higher principal so technically less percent gain).  That just assumes you're actually going to invest what you were paying to debt.  It's still an active step a person can prevent oneself from doing.

    You're also using a low rate and assuming a constant source of income/cash flow for the debt payments.  If that's not secured, obv the debt needs to be paid.  On the other hand, if you're fortunate enough to have that low of a rate for that low of a term, you've p much limited the damage already and thus limited the utility of paying it off much more aggressively as it is.

    You also see how little difference it makes in the end.  If you pay the loan with a lump sum which you actually possess at the time, and then "pay yourself back" into an investment what your payment to the loan would have been, you end up with the same but were debt-free and flexible that entire time.  You basically "loaned the money to yourself."  That's the best way to go imo - you have liquidity, you have funds on hand, and you're earning compound interest which will carry on beyond the term of what the loan would have been. Hence why high net-worth people who can afford not to finance things don't need to finance - if you've won the game, stop playing - and why people with nothing earning over time and poor liquidity, with insurance against catastrophe and well-structured low-interest shorter-term debt should prioritize retirement investing (esp tax-advantaged accounts) over those debts.

    I'm not sure I've proven anything other than an alternative perspective.  I know I took way too long to do this, though.  I don't think you're explicitly wrong, either.  Whatever.  Cheers

     

    Leave a comment:


  • Complete_newbie
    replied
    tl;dr

    This thread keeps popping up.

    My take:

    1. Math is obvious to me to the point of I don't feel like proving it.

    2. Anyone has any leads on 4% or lower loan - PM me. I'll gladly use that lever. Leverage is the most underrated aspect of finance on PF blogs like this. Which is fine, I guess. But people are missing out.

    3. Based on 2 above, I am glad not everyone is great/sharp/cognizant about the virtues of debt; it may become too expensive n the market (thanks Fed for raising the rate...#nothanks) if everyone wants it. So please - pay off that mortgage! RIGHT NOW!

    4. Without leverage, no way I boost my monthly earnings that I am at now. Alternatives would be: working like a dog as an orthopod / WCI 2.0 empire creation. Both of these require significant "sweat" work. Pass.

     

    Leave a comment:


  • Donnie
    replied







    I agree that many on here are debt averse, but I think you guys may be going too far. I have seen some specious math on the forum lately. For example, the IRR on paying down your loan is equal to the interest rate. It’s not half or something way less because of compounding. The IRR on debt pay down assumes you can reinvest cash flows freed up by not having to service debt at the equivalent debt return, which shouldn’t be difficult given the low interest rate on debt.

    It’s apples and oranges to say you only need a [25]bps return over 30 years to make it worth it to keep your 5 year loan outstanding rather than pay it down. You need to keep the investment horizons the same to make a comparison.
    Click to expand…


    Yes, those were shown to illustrate how ridiculous the you need x% to beat a loan of y%, and show how powerful compound interest is compared to simple, which many people on this forum still do not fully appreciate.

    That doesnt make sense in reality unless you’re liquidating the account at the time period and ignores the whole upside/opportunity cost side of things, these arent competing capital projects on a similar timescale with a similar rate. The effect is applicable and true, the loan is gone and you havent the savings from that time period could otherwise compound until draw down and they do get to continue to grow no matter what valuation method one applies.

    It makes more sense from a practical standpoint to simply compare the cost of capital vs. expected return/total  at some nominal rate over your investing horizon with the same cash flows/total. Thats how it will effect your long term bottom line. The student loan hero calculator is actually pretty great for seeing this clearly.

    I also agree that as a financial blogger, you have a voice that people listen to and have to be much more careful with what you say and prescribe so to speak. Nuance is tough and hard to know what people will do with the information. Given that we’re mostly physicians we’re probably overly concerned with that aspect but I’d likely have similar canned answers to these kinds of questions publicly on a blog, etc….Here, we’re a subset of a subset and its different, I get the blogger reasons.
    Click to expand...


    I think this post and others are more confusing than helpful.  Here are charts with the actual math showing net worth sensitivity to market returns after 5 years if you have $44,511 of debt and $44,511 in a taxable account.  As folks can see below, the variability in net worth and the upside after 5 years are both greater if you keep the debt, hence the notion that leverage increases risk and return.  If the returns are lower than the interest rate, you would be better off paying down the debt.  Returns compounding on while interest on the loan doesn't does not mean you should always be borrowing.  The b/e point is the interest rate.  That's all there is to the analysis.  It's not complex.

    Leave a comment:


  • Zaphod
    replied




    I agree that many on here are debt averse, but I think you guys may be going too far. I have seen some specious math on the forum lately. For example, the IRR on paying down your loan is equal to the interest rate. It’s not half or something way less because of compounding. The IRR on debt pay down assumes you can reinvest cash flows freed up by not having to service debt at the equivalent debt return, which shouldn’t be difficult given the low interest rate on debt.

    It’s apples and oranges to say you only need a [25]bps return over 30 years to make it worth it to keep your 5 year loan outstanding rather than pay it down. You need to keep the investment horizons the same to make a comparison.
    Click to expand...


    Yes, those were shown to illustrate how ridiculous the you need x% to beat a loan of y%, and show how powerful compound interest is compared to simple, which many people on this forum still do not fully appreciate.

    That doesnt make sense in reality unless you're liquidating the account at the time period and ignores the whole upside/opportunity cost side of things, these arent competing capital projects on a similar timescale with a similar rate. The effect is applicable and true, the loan is gone and you havent the savings from that time period could otherwise compound until draw down and they do get to continue to grow no matter what valuation method one applies.

    It makes more sense from a practical standpoint to simply compare the cost of capital vs. expected return/total  at some nominal rate over your investing horizon with the same cash flows/total. Thats how it will effect your long term bottom line. The student loan hero calculator is actually pretty great for seeing this clearly.

    I also agree that as a financial blogger, you have a voice that people listen to and have to be much more careful with what you say and prescribe so to speak. Nuance is tough and hard to know what people will do with the information. Given that we're mostly physicians we're probably overly concerned with that aspect but I'd likely have similar canned answers to these kinds of questions publicly on a blog, etc....Here, we're a subset of a subset and its different, I get the blogger reasons.

    Leave a comment:


  • StarTrekDoc
    replied
    True, one has to take into account savings of 5 years is different from 30.

    It's an extension of the argument of compounded interest savings.

    Does one delay saving today over anything, including debt repayment? In pure math, the answer is invest and pay the minimum as long as the math works, which usually does in lowest interest student loans compared to average market returns.

    The harder part is the psychological factor and market forces. One can debate the market forces of retirement and debt voids each other out in priority sibce it's income flow based, and then really boils down the psychological factor and more common debate on sleepless nights -- pay off mortgage or invest?

    Leave a comment:


  • Donnie
    replied
    I agree that many on here are debt averse, but I think you guys may be going too far. I have seen some specious math on the forum lately. For example, the IRR on paying down your loan is equal to the interest rate. It’s not half or something way less because of compounding. The IRR on debt pay down assumes you can reinvest cash flows freed up by not having to service debt at the equivalent debt return, which shouldn’t be difficult given the low interest rate on debt.

    It’s apples and oranges to say you only need a [25]bps return over 30 years to make it worth it to keep your 5 year loan outstanding rather than pay it down. You need to keep the investment horizons the same to make a comparison.

    Leave a comment:


  • StarTrekDoc
    replied
    Mantra:  Work smarter, not harder.   Sometimes we focus on the debt tree too intensely and forget the goal of Net Worth building and getting there the most efficient manner.

    Eg:  we are going to splurge on our selective indulgence of the year:  Tesla 3.    We have the means to pay cash outright without impacting our retirement fund flow.    Some would tap their 'EF';  others would tap their HELOC; others would liquidate some, and (none here--would tap equities funds).     We will probably elect to take the 1.9% financing offer and incur debt.  Why?  'cause we can probably earn better with our money elsewhere.   We have cash flow and earnings to do it, and have backup.  The MATH works better; but there is risk -- as anything when talking %

    Leave a comment:


  • Zaphod
    replied
    Yes, you're immediately the debt lover, when really you're just trying to have a little balance in the force with our very debt averse kind. Its not necessarily an accurate reflection of your ideology on the whole. I just bought a car for cash for instance, could have easily financed at a below inflation rate, but knew I'd buy more car than I wanted (i didnt want one period but needed it).

    Its also asset/family protection as well, if I die, besides the life insurance my student loans are gone, but the family gets to keep the SEP, HSA, and taxable, etc...If I spent the last 4 years paying off my loans thered be nothing but a shiny framed promissary note.

    Leave a comment:


  • DMFA
    replied


    Yes, there has to be a balance and one cant go crazy, again, that doesnt apply here and those scenarios are straw men on a site like this where everyone is already very conservative.
    Click to expand...


    Ugh.  Tell me about it.  I get straw-manned almost every time I mention thinking about not trying to obliterate your short-term, low-interest debt yesterday (or your well-structured tax-deductible mortgage loan secured by your appreciating, insurance-backed house) and doing a ridiculous debt-free scream.  "So if you shouldn't pay off your mortgage right away, you're saying you should stay a debt slave, take out credit cards to buy a Richard Mille, and finance a 911?"  C'mon.  Stop aggrandizing the semantic and deal with the ontology.  Debt complacency is real, but so are fixed term-limited costs, inflation, and open-ended compound growth.


    What we should be doing is making sure everyone actually understands the pros and cons of these decisions, rather than saying that one is automatically better than the other as is often the case on many financial sites regardless of income/debt or profession. More of an informed consent viewpoint. Most of the disagreements here even just come from physicians at different stages of their lives with different priorities and concerns. No one disagrees that these are all good choices overall.
    Click to expand...


    Yep, and just like giving informed consent to our patients, all the higher-order data and thought processes can go misunderstood or not understood at all.  Can't tell you how many deer-in-headlights responses I get in both scenarios, and how many follow-up inquiries about something that was supposedly completely understood pre-procedure has become a "you never told me" moment.

    Maybe not everyone's equipped to make those kinds of inquiries and information-based decisions and needs a simple all-or-nothing mantra.  That's why Dave Ramsey is popular.  He's a radio personality first, so clearly taking an extreme perspective is going to be more titillating and get people a) to listen and b) to become "followers."  Taking an extreme leverage approach to investing can very likely ruin you.  Taking an extreme debt-elimination approach will definitely keep you safe, hence that's the simple message to give for financial help.  Obv if you're going to break it down, you're going to find it's a more complicated decision than that, without a clear right answer but with greater probability of greater net worth from some decisions, and greater probability for "safety" in others.  WCI does a similar approach, but more cerebral, which befits the audience very well; medicine is a cerebral profession (even ER docs, a little bit...lol).  Sure, you should definitely minimize and work hard to eliminate debt, no question...but using a 5-year recommendation for loan repayment as opposed to immediately and generally prioritizing the tax-advantaged retirement accounts before those well-structured debts is rooted in accurate concepts.  But because his existence as a paragon of financial prudence has that gravitas, I find it very unlikely that he'd ever explicitly support anyone letting a well-structured debt linger - "OMG, WCI said debt was OK?  What about [insert straw man argument here]?" - so of course most of his articles are going to be about paying off one's mortgage and similar things.  I was considering asking him or PoF to do a guest post called "STOP!  DON'T PAY THAT DEBT! ...or do, but think about it first," maybe a pro-con, but again, then I end up getting pigeon-holed as a debt-lover and being asked how much I still owe on my Ferrari.  I hate Ferrari...AMG all the way.

    Leave a comment:

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