Well, there's debt and there's debt. Right now my wife and I have three major debts: mortgage (4%), student loans (4.5%), HELOC (1.75%) -- and those rates are all effectively lower because the interest is tax deductable. When you're talking those kinds of interest rates, I don't think it's unreasonable at all to put money into retirement accounts (especially if those too are tax advantaged and/or if your employer matches).
But yes, if you have any kind of credit card debt, you're probably paying 10% or more on that, and you should be paying that down (and not adding anything new!) with money you'd otherwise earmark for savings.
Actually paying down the mortgage would be sensible. It is a guaranteed return risk-free investment. Mortgage rates are expensive when compared to comparative near risk-free investment; Treasure notes, CD, money market are in sub-1% range. Comparing mortgage paydown (risk-free) to stock (higher risk) are not a fair comparison.
My CC interest rate is 38% :) Sometimes I feel like paying everything but $1 just to see the interest charged..but I'm too lazy to stop the auto-payment system.
Comments
Well, there's debt and there's debt. Right now my wife and I have three major debts: mortgage (4%), student loans (4.5%), HELOC (1.75%) -- and those rates are all effectively lower because the interest is tax deductable. When you're talking those kinds of interest rates, I don't think it's unreasonable at all to put money into retirement accounts (especially if those too are tax advantaged and/or if your employer matches).
But yes, if you have any kind of credit card debt, you're probably paying 10% or more on that, and you should be paying that down (and not adding anything new!) with money you'd otherwise earmark for savings.
Actually paying down the mortgage would be sensible. It is a guaranteed return risk-free investment. Mortgage rates are expensive when compared to comparative near risk-free investment; Treasure notes, CD, money market are in sub-1% range. Comparing mortgage paydown (risk-free) to stock (higher risk) are not a fair comparison.
My CC interest rate is 38% :) Sometimes I feel like paying everything but $1 just to see the interest charged..but I'm too lazy to stop the auto-payment system.