When to invest, after or before debt free?

We've been following Dave Ramsey and John Cummutta for years now. And, they both teach that its better to be debt free before you start retirement savings. We are around $32k in debt not including our house ($122k).

Just wondering what some of you believe?

Thanks,

JW

http://needtobedebtfree.blogspot.com/

I use Dave Ramseys plan... the baby steps say to pay off debt before investing.

hard to say in my opinion. sorry to revive an old thread but why doesn't it make sense to earn interest vice avoiding paying it. If you pay off the credit card debt you certainly save interest but you also don't earn it. So effectively you lose whatever rate you could have earned on the money you used to pay off the card. With the "one a week" 0% interest balance transfer offers that keep flying in my decision was to carry the $10k revolving debt at 0% and invest the entire $20k I had liquid. I pay down the $10k at $500/mo and when the time comes I'll transfer it to another 0% interest on balance transfers card to avoid neutralizing the returns on the original $20k. Anyone see a flaw to this logic. I feel like it's simply making credit card companies work for me. My credit score has stayed at 789 the whole time I've been using this tactic so I don't see the issue. Sometimes you can even get transfers without fees. I'd think someone savvy could do the math on the numbers I've used and prove me right or wrong pretty quickly.

chiplee,

Your method is more profitable UNLESS the market tanks. Then you wind up blowing all your remaining profit (if any) on Maalox and Pepto as you try to pay off your 0% debt and have little equity.

certainly, but with paypal accounts paying over 5% I see no reason you couldn't find a suitable level of risk to meet your comfort level/needs that would make it make sense to do it my way.

Knowledge is power and I believe chiplee has simply learn somethings about the credit card industry and he is taking advantage of it. It is the same thing happening in the markets. Traders borrow money from Japan at .50% and invest in other countries where the interest rate return in higher, like the in USA or UK or Australia. So why not, if you have the knowledge play around it.

However, if you are capable of paying off the complete debt, I believe it is the best strategy to build wealth.

It all depends on what your rate of return is on your investment. If you can get a larger return on your invest than what your interest is on your debt, then by all means invest. If not, your investment is not making you any money and you should pay off your debt.

-EJP-
www.rmicsi.com

It all depends on what your rate of return is on your investment. If you can get a larger return on your invest than what your interest is on your debt, then by all means invest. If not, your investment is not making you any money and you should pay off your debt.


I think you are saying right.