Pay it off or invest?
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wrote on 29 Sept 2021, 16:20 last edited by
I know that’s supposed to be the answer but compounded interest? At her age? I would put at least half into the IRA.
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wrote on 29 Sept 2021, 16:31 last edited by
Is there interest on the medical debt?
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wrote on 29 Sept 2021, 16:37 last edited by Renauda
Pay off debt.
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wrote on 29 Sept 2021, 16:48 last edited by Doctor Phibes
I'd get rid of the debt, too, and then maybe invest the money she's currently using to pay off the debt each month. That way, she doesn't feel any difference, but she's investing rather than paying off.
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I'd get rid of the debt, too, and then maybe invest the money she's currently using to pay off the debt each month. That way, she doesn't feel any difference, but she's investing rather than paying off.
wrote on 29 Sept 2021, 16:49 last edited by Doctor PhibesThis post is deleted! -
wrote on 29 Sept 2021, 16:56 last edited by
She's also getting about a 10% increase in salary, so that's another good thing.
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wrote on 29 Sept 2021, 16:58 last edited by
@george-k said in Pay it off or invest?:
She's also getting about a 10% increase in salary, so that's another good thing.
Cha-ching! Nice going.
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wrote on 29 Sept 2021, 17:27 last edited by
It’s easy to justify investing if the return is higher than the loan interest. But people fine debt stressful so it becomes a quality of life issue. Minimizing stress doesn’t always maximize expected money.
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wrote on 29 Sept 2021, 17:28 last edited by Jolly
@george-k said in Pay it off or invest?:
She's also getting about a 10% increase in salary, so that's another good thing.
Is she able to pay her bills on what she is currently making? If so, use all or part of the raise for investing/savings. If she doesn't have three months take home salary in a readily accessible account, save. If she has it saved, invest.
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wrote on 29 Sept 2021, 18:00 last edited by
We owe money for our house, but the interest rate is so low that I rather invest surplus money on the stock market.
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wrote on 29 Sept 2021, 18:15 last edited by
@renauda said in Pay it off or invest?:
Pay off debt.
+1, assuming the interest rate is greater than zero.
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We owe money for our house, but the interest rate is so low that I rather invest surplus money on the stock market.
wrote on 29 Sept 2021, 18:34 last edited by@klaus said in Pay it off or invest?:
We owe money for our house, but the interest rate is so low that I rather invest surplus money on the stock market.
Same here. We're at 2.75%, so we could pay more off but are deciding only to add a little to each mortgage payment.
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It’s easy to justify investing if the return is higher than the loan interest. But people fine debt stressful so it becomes a quality of life issue. Minimizing stress doesn’t always maximize expected money.
wrote on 29 Sept 2021, 18:36 last edited by@horace said in Pay it off or invest?:
It’s easy to justify investing if the return is higher than the loan interest. But people fine debt stressful so it becomes a quality of life issue. Minimizing stress doesn’t always maximize expected money.
Agreed, aside from our mortgage (mentioned above) we avoid any other debt lasting longer than 30 days (e.g., pay of credit card each month). Something about not having the debt, like you said, that is good....even if it's not a perfect financial move.
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@klaus said in Pay it off or invest?:
We owe money for our house, but the interest rate is so low that I rather invest surplus money on the stock market.
Same here. We're at 2.75%, so we could pay more off but are deciding only to add a little to each mortgage payment.
wrote on 29 Sept 2021, 18:36 last edited by@89th said in Pay it off or invest?:
@klaus said in Pay it off or invest?:
We owe money for our house, but the interest rate is so low that I rather invest surplus money on the stock market.
Same here. We're at 2.75%, so we could pay more off but are deciding only to add a little to each mortgage payment.
We pay 1% interest.
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wrote on 29 Sept 2021, 18:58 last edited by
IRA all of it, tax free growth
Save until it hurts
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@renauda said in Pay it off or invest?:
Pay off debt.
+1, assuming the interest rate is greater than zero.
wrote on 29 Sept 2021, 18:58 last edited by@axtremus said in Pay it off or invest?:
@renauda said in Pay it off or invest?:
Pay off debt.
+1, assuming the interest rate is greater than zero.
I am not familiar with any consumer debt that accumulates 0% interest over time. On the other hand, can people in the US write off medical expense debt and interest from their personal income taxes? If so, that could possibly make investing the money more attractive in the long run.
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@axtremus said in Pay it off or invest?:
@renauda said in Pay it off or invest?:
Pay off debt.
+1, assuming the interest rate is greater than zero.
I am not familiar with any consumer debt that accumulates 0% interest over time. On the other hand, can people in the US write off medical expense debt and interest from their personal income taxes? If so, that could possibly make investing the money more attractive in the long run.
wrote on 29 Sept 2021, 19:05 last edited by George K@renauda said in Pay it off or invest?:
can people in the US write off medical expense debt and interest from their personal income taxes?
Only if it exceeds 7.5% of the adjusted gross income. And then, only the portion above that threshold is deductible.
=-=-=-=-=-=-=-=For tax returns filed in 2021, taxpayers can deduct qualified, unreimbursed medical expenses that are more than 7.5% of their 2020 adjusted gross income. So if your adjusted gross income is $40,000, anything beyond the first $3,000 of medical bills — or 7.5% of your AGI — could be deductible.
That means if you had $10,000 in medical bills, $7,000 of them could be deductible.
The 7.5% threshold used to be 10%, but legislative changes at the end of 2019 lowered it.
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wrote on 29 Sept 2021, 20:12 last edited by
Like many people, I have absolutely no problem using money, but I have no idea how it actually works.
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@renauda said in Pay it off or invest?:
can people in the US write off medical expense debt and interest from their personal income taxes?
Only if it exceeds 7.5% of the adjusted gross income. And then, only the portion above that threshold is deductible.
=-=-=-=-=-=-=-=For tax returns filed in 2021, taxpayers can deduct qualified, unreimbursed medical expenses that are more than 7.5% of their 2020 adjusted gross income. So if your adjusted gross income is $40,000, anything beyond the first $3,000 of medical bills — or 7.5% of your AGI — could be deductible.
That means if you had $10,000 in medical bills, $7,000 of them could be deductible.
The 7.5% threshold used to be 10%, but legislative changes at the end of 2019 lowered it.
wrote on 29 Sept 2021, 21:27 last edited by Renauda@george-k said in Pay it off or invest?:
@renauda said in Pay it off or invest?:
can people in the US write off medical expense debt and interest from their personal income taxes?
Only if it exceeds 7.5% of the adjusted gross income. And then, only the portion above that threshold is deductible.
=-=-=-=-=-=-=-=For tax returns filed in 2021, taxpayers can deduct qualified, unreimbursed medical expenses that are more than 7.5% of their 2020 adjusted gross income. So if your adjusted gross income is $40,000, anything beyond the first $3,000 of medical bills — or 7.5% of your AGI — could be deductible.
That means if you had $10,000 in medical bills, $7,000 of them could be deductible.
The 7.5% threshold used to be 10%, but legislative changes at the end of 2019 lowered it.
Thanks George. Ours is essentially either 3% of your net income as reported on your tax return, or $2,397 in 2020 ($2,421 in 2021), whichever is lower. But it does vary from province to province and there are other health related expenses which could be deducted under other categories. Needlessly complicated. Like most people I have only tried to use it for after insurance out of pocket charges for prescription drugs, dental work and eye exams and glasses. I doubt whether it much of any difference at the end of the day.
https://www.corkumfinancial.ca/medical-expenses-what-can-you-claim/
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wrote on 29 Sept 2021, 21:57 last edited by
I see anything at <4% as a sort of light leverage to invest more money in the market.
If it's above that I pay it off, if it's below that, I let it ride.