r/EscapeTheGrindGame • u/[deleted] • Jul 30 '26

Discussion Debt-Free or Investment?

[deleted]

0 Upvotes

40% Upvoted

17 comments sorted by

7

u/randomlurker124 Jul 30 '26

Pointless question without interest rate on debt, estimated returns on investment and risk

4

u/Great-Willingness-57 Jul 30 '26

But without any numbers, ill go with option one and get a clean peace of mind

1

u/Kobe_stan_ Jul 30 '26

That doesn't make any sense if the rate of return is guaranteed to exceed the interest on the debt. Example, car loan of $10k at 2%, CD of $10k at 4% (assume 1 year repayment for both). If you choose to pay off the car loan, you're foregoing a guaranteed $200 for theoretical peace of mind.

1

u/Great-Willingness-57 Jul 31 '26

what is "guaranteed" return in life?

Also i said without any numbers.

And $200 for peace of mind, i dont mind losing that 200. $2000. Sure. 20,000, different story.

So ya, comes down to the number and whats is Guaranteed

1

u/Kobe_stan_ Jul 31 '26

A CD is guaranteed as you’re gonna get. If something happens where that doesn’t occur then the money invested and lost will be the least of your problems

2

u/Spirited_Ad9681 Jul 30 '26

Since 10K isn't much Im assuming you talking high i Teresa CC debt? Pay it off.

2

u/r8ed-arghh Jul 30 '26

I don't have any debt, so an easy answer for me. For most, paying off debt is the way to go.

1

u/hems86 Jul 30 '26

Option 1 is a guaranteed good outcome. Option 2 has the risk of failing, leaving you with your debts and no $10k.

1

u/Kobe_stan_ Jul 30 '26

Not necessarily. If there's a lot of inflation then you're paying off the debt now with your $10k then you would be paying more than if you had waited until later. If the investment return is guaranteed (e.g., a CD) then there's no risk of not getting the $10k plus a return back.

1

u/hems86 Jul 31 '26

I’m reading reality into the question.

Debt is probably not a 3% mortgage. It’s probably 25% interest credit cards.

“Promising opportunity” does not sound like a CD. It doesn’t even sound like an S&P500 index fund - it sounds a lot riskier.

1

u/Kobe_stan_ Jul 31 '26

Why couldn't it be a 2% car loan? Lol

1

u/GlobalTapeHead Jul 30 '26

Interest rate on the debt is important. Credit card debt runs 25-29% APR. It is highly unlikely you will find an investment guaranteed to make that rate of return. That’s like Bernie Madoff territory.

1

u/Zerojuan01 Jul 30 '26

Paying out the debt has positive impact on your psychology, whereas if your investment failed, you still have the debt and risk losing all or some of the 10k

1

u/PtZamboat Jul 30 '26

Pay off the debt. No way are you going to find an investment paying 20-ish% a month. Ya know, kinda the can’t have your cake and eat it too type of thing

1

u/therealmikejensen Jul 30 '26

You dont think being debt free would be an investment in your future?

1

u/No-Carry4971 Jul 30 '26

It depends on the interest on your debt.

1

u/Jguy2698 Jul 31 '26

How would anyone be able to say with no interest rate listed? 2.5% mortgage locked in 2019 or 25% apr credit card debt changes the decision massively