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December 12th, 2017, 11:40
Originally Posted by Pladio View Post
It depends on the type of debt.
If you have a mortgage at 3% interest rate, then it does not make any sense to pay it off as your expected returns from investments should be higher than that (in addition to the house value hopefully going up).

If your debt is credit card debt at 40% interest rate per year then you should do everything you can to pay it off quickly, because otherwise it doesn't matter how much you invest, it is unlikely to generate more than 15% a year (unless you're a very lucky SOB).
I got rid of that kind of debt many years ago. Even as a layman - it was pretty obviously a very bad spiral and I opted to consolidate all my shit after getting a decent job.

I've been committed to having no debt since then, but I caved and bought a (relatively cheap) new car 6 months ago. I knew it wasn't the most financially sound decision - but it was deliberate and I really needed one I could rely on - and I knew I could pay out the loan not too long after, if I felt like it.

Don't remember the interest rate, but I know it's not exactly favorable. I mean, not a lot of loans are

I think I'm paying something like 20K Danish Crowns in loan expenses for a car that cost 120K total - and I paid 20K up front. I believe it's just under 6% "ŇOP" - which I guess is called compound interest rate in English?




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