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Why Shell out Off Credit card debt If I Can Invest at a Greater Curiosity Fee?





Why Shell out Off Credit card debt If I Can Invest at a Greater Curiosity Fee?

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44 comments

  1. Dave is wrong. His shpeal works very well for people who are broke or incompetent with money. You need to know what you are doing, but there is a lot of room for growth

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  2. Just started listening to Dave, and while I agree on most of his views, telling the caller to quit investing wasn't the best advice, considering compounding dividends earlier than later is one of the key elements in building wealth.

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  3. He doesnt need to sto0 401k
    He can pay that 30k or so in few months. No need to do any life changes.
    He has a strong income

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  4. Including recessions and bear markets, the S&P 500 averages between 9 and 10 percent annually. Letting market risk scare you out of investing in an index is thinking short term.

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  5. I disagree.

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  6. Caller is a young guy, this call saved him from the mistakes that I've made. Only the house wins in gambling. In a young man's head everything is perfect, he only considered the money he makes when he WINS. They always think about the best case scenario. But when you LOSE your money AND still have debt, that is when it all comes down on you. If you are debt free, at least you go back to $0 when you lose, not negative. NEVER gamble with borrowed money.

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  7. I'd leave the investment. You make good enough income to pay off the debt quickly. On a side note, do people even ask what banks do with their money? Actually, it's not hard to find out where they invest it, how much they made, and then the ridiculously low percentage they give back to you. Read up, and do what they do! Evaluate your risk tolerance, get a PLOC at low interest (5% or less), and find a stable stock to invest in that will yield you 15% or over. Manage your risk by putting a stop-loss (how much you can afford to lose), and watch yourself be free of poverty mentality. It's not even hard finding companies that pay 7% dividend.

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  8. I dont get how people can get this dumb. They make more than they can handle

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  9. This is horrible advice but he you bloviates confidently enough the low information, poor math skill followers defend him.

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  10. Good advice, became a subscriber with this video.

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  11. If the risk weighted return on your investment is higher than the interest rate on your debt, then you can pay your debt off faster by investing anything above the minimum payment on your loans, up until your investment amount equals the remaining balance on your loans, then cash out and pay them. You will pay them off faster this way for sure, though it's not a huge difference- not spending the money matters more.

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  12. Why would Dave want you to invest? Then you're his competition. Dave is the irrational one in this video. His hardline stance on debt is nonsense. Debt is only as dangerous and risky as the expertise of the person managing it. It still blows my mind that people are able to understand simple concepts like paying off high interest debt first, but they still cannot make rational decisions like whether to pay off a low interest debt (interest forgone) or put that money in a high return venture for the long-run (yield gained).

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  13. I wanted to see a better call cause I had the same question. I make enough to make the payments on my debt, and have a kid on the way. At our current rate we'll be debt free in roughly 4 years. My 403b match seems the logical choice to put my "extra" money to (by extra I mean like.. $120 / month) because if I put in 1%, the company will put in an additional 2%. Then it's a 1-1 match until 5%; they put in 4% regardless if I put anything in. So, I would be dumb not to put in my $15 a paycheck (1%) to gain an additional $30, so that seems like a no brainer to do. If I put in an additional $60 / paycheck, work will add $60. In the long run keeping my debt in it's current path of a 4-year plan, and not adding the extra $120 – $150/mo to debt payment seems like I'll have more money in 10 years. It's basically ~$8,000 in interest payments to debt vs ~$8,000 in 403b work contributions (+ compounding interest). Is it worth it to lose 4 years of compounding interest and balance build up in my 403b just to be debt free a couple years sooner? Seems like it'd be taking a step backwards in the long-run. I'm 32 now, so would love for my money to grow as long as it can.
    ie- I feel if I used my 403b contributions to pay off debt, I wouldn't "save" any money, and I'd be $5-7k behind in my 403b marathon to retirement, I'd just be able to say I was debt free sooner.

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  14. Dave is the guy who will go the safe and stress free route… seems like the caller already knows he wants more activity with investing at the moment. Both are good routes to me!

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  15. Egotistical braggart on the phone. Does he really think he'll have trouble paying off a measly $10k with a $130K income? He knows what he's doing.

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  16. There's a time for everything. At the early stages of a bull market where there's blood in the streets still, but a pattern of growth, LEVERAGE LEVERAGE LEVERAGE!!! Take the money at 3% and go earn 15% on it…

    Once we get to times like now, when asset values are inflated, everyone and their dog is a real estate investor, and there's no value to be found in the markets or real estate? Stop buying, de-leverage by paying down debt, and then start stock piling cash for the next downturn. There's a time and place for everything. It's not as black and white as Dave said.

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  17. Debt is only good when it is being used as leverage to make a positive ROI. They actually teach you in finance that companies should include debt in their capital structure as it reduces their weighted average cost of capital through tax shields. Similarly, for people, if you take say a 50k credit line to invest in a house and you receive rent which covers cost of debt and then some, plus the appreciation in property, that 50k debt was a brilliant idea.

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  18. I’d like to do a show with you. I have a bachelors degree in nursing and now I am working sales. This month I should be at around 80,000 plus a small 1-5k in additional income. I have been in debt since I got out of school and I’m tired of it man. I’m a good lookin guy with a good work ethic and I like to think I am smart but, unfortunately, debt stupid! I think I would make a great show when I succeed and help out your channel, which I love. I’ve read your audio books and I try to follow some of the advice but I would definitely benefit from a little added attention. Let me know man!

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  19. I love you Dave happy that I found you and your podcast may god bless you and your family ❤️

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  20. I like Dave and think he does a ton of good to help educate people on finance but I also think expense ratios/fees are important. An S&P500 etf is virtually free of fees (.04% exp ratio). Returns matter but what many critique is actively managed funds that charge higher fees (closer to 1 percent) and then don’t outperform the market. Many investors including buffet advocate for the S&P 500 it has returned roughly 9.8% over the past 90 years, its passive and most active managers will not outperform the S&P 500 especially long term. I am not sure the specific Twitter comments he is referencing but just my perspective to his comment at the end.

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  21. Dave’s math doesn’t make sense for making you the richest person you could be. He assumes you have no self discipline, and won’t pay off your debt if you don’t only focus on debt. Basically he’s saying you can’t do more than one thing at a time.

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  22. Here is the thing, I hate, HATE my job. I am a cop I "net" 47k. Ya, ya I have health insurance which is a high-deductible. I get "paid-time off" which I can rarely use due to man power other than that there isn't any benefit to working the job. I am currently in investigations which isn't too bad, however when my time is up there I will have to rotate back to patrol and I hate patrol. I've got myself in a good situation, paid off all of my cars, no other debt and my checks are going towards our modest house and basic living expenses. The rest has been going towards my wife's schooling. My wife will soon graduate as a registered nurse which she says is what she wants to do for work. When she is done I am going to take the risk and make a career change. I'd rather do that than be miserable working a job I cant stand and making a horrible wage. Some times you have to take a risk over playing it safe.

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  23. Debt is how you become a billionaire

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  24. Simple math his advice is wrong.

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  25. His math makes sense. He will make more money if he sticks to his strategy. But Dave point is we humans are more emotional than rational. Therefore he'll be better off paying the debt and later invest large amount of money.

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  26. Wrong answer from Dave. The correct answer is it depends on the return rate from the investments and the interest rate from the debt plus the principle debt. If you have $25000 in debt and have 5% interest and you have $100,000 in a 401k and are making 20% returns, you'd be a fool to hurry up and pay that debt off. It's an objective mathematical equation and it depends. Most of the time, yes, it makes more sense to pay off the debt but that is because most people make about the same returns in their IRA/401K as their interest rate on their loans. But if you really know how to invest and trade, you are far better off investing, especially with low interest rates

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  27. This is pretty ridiculous. Don’t look at/worry about expense ratios? This is clearly just plugging his own system of advisers who sell their own mutual funds. Also, investing excess capital instead of paying down low interest debt is mathematically correct. I understand the need for a cookie cutter system for some people, but if you’re going to talk for hours on the radio for years, at least bring a bit of nuance into it.

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  28. The funny thing is that DR is always telling people to invest in stock mutual funds, and pretty much every successful company stock held inside those mutual funds… borrows money in order to grow the business. So he tells us not to borrow to invest, but to invest in companies that borrow to invest.

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  29. Because when the stock market has another crash as it does every decade my mortgage will not suddenly go back up, it will continue to pay down and only down. Investors including Dave seem to have memory wipes every time the stock market corrects down and they just ignore all the bad years. "I average 9% returns in my mutual funds if you take out all the crashes hurr…..hurr….hur…..oh wait including crashes it's 3%

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  30. Ramsey has a good gig. And im sure it helps get tons of people out of debt…but this is 100% WRONG…math doesn't lie, if you're making more per dollar from income interest than you are paying per dollar on debt interest, you're going to have a higher net worth in the long run…that's not a case by case basis…thats basic simple math which is true 100% of the time

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  31. I like Dave a lot but I have excellent credit, I'm responsible, and I'm not a child. For this reason I can SAVE (online savings account 1.6% APR) and get a higher interest rate than I pay with my car loan which is 0.9% APR. I'll keep my car loan and and park my money in my safe savings account.

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  32. I tend to agree with Dave most of the time. His advice is effective and following his program strictly is not a bad idea. I personally never stopped the investing in the 401k at 5% to make sure I got the employer match. Besides that I threw everything I could at the debt. So with little variation I followed Dave's advice.

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  33. I watched an episode of this show where Dave interviewed a multimillionaire who made his money through debt leveraged real-estate. “Never” is a big word Dave. We know you know the power of debt leveraging. You got your start with it and I’d argue that you wouldn’t be where you are today without having used debt in the beginning. This is my probably my biggest complaint with your show.

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  34. When someone steals Dave's "better than I deserve"… I cringe so hard.

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  35. All other things being equal pay student loan debt last because you get a tax deduction for student loans but not consumer credit.

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  36. Stupid. I get that Dave has to keep things simple for the majority of Americans who bury themselves in debt. But this guy clearly isn't one of them, his advice should have been stay on the gas doing both, your debt will dwindle to nothing will your investments grow, granted it will be a marginal difference monetarily but it will in fact be more. You're killing it dude, keep up the good work.

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  37. Lol Dave's wrong here. How can he straight up lie about the math? You would have been more rich at 35 had invested.

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  38. 👌

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  39. I'd love for Grant Cardone to get with Dave Ramsey to debate this exact topic. But considering Grant has amassed a fortune worth multiple times Daves net worth I think that says all you need to know.

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  40. Borrowing money to invest at a higher interest rate has a name, it's called the banking industry. Sure it involves risk, and isn't for everyone, but the math is simple, and at interest rates below 4% the long term value is clear, leveraged debt and compounding are massively superior to debt free investing, that said it comes at a price, in the form of risk, and the average person is bad at risk management, so this strategy is not advisable for those who have had bad money habits in their life.

    On the final point of expense ratios, maybe dave is interviewing the wrong millionaires, because once you hit the first million, the expense ratio has a lot to do with how fast you hit the second one. .2% on a million is 2k/year, you really gonna tell me all things being equal 2k/year is immaterial?

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  41. I prefer to pay off debt. Peace of mind counts for something.

    The market will crash again. Then you can lose half your money AND still have debt.

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  42. Would it make sense from 16 to 19 build up around $20000 to put in lending club or prosper and than use the monthly interest for expenses in college?

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  43. Hahaha, Dave and his defense of expense ratios. There are actually plenty of millionaires who got to where they are thanks in part to saving on the fees that otherwise go to people who don't deserve them. For that matter there are probably even more who put their credit cards to great use and walk away with benefits every day.

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  44. Mathematically, this is bad advice. Emotionally, it can be beneficial. I would keep investing into my 401k. And yes I am wealthy be Dave Ramsey standards.

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