Should I pay my debt off first before I start investing?

Ok, everyone this is a test and I want to get a gauge for how people think (financially). As a business person, theoretically I know that if I can make 9% in the market, and lose 8% from debt interest I will earn 1% long term. Knowing this, how do you prefer to throw your money around?

Should I pay my debt off first before I start investing?
1% is toilet paper money - pay off the debt first.
Reply:It all depends on the situation. For example, if you have money in a savings account that gets a higher interest rate then the credit cards, yes, keep it in the savings. If you are IN debt, and getting down to stashing your money i would say no, judgments against you can take your money. I would have to look at the situation on an individual basis. If you are going on investing, well, that can go either way. You NEVER REALLY know anything and guarantees arent something most people hand out.
Reply:Yes you should. And 1% gain long term at 4% inflasion is 3% loss!
Reply:As for me, definitely pay off debt first. Unless is a 401(k) retirement plan that a employer is offer very high percentage of match up.
Reply:theory wise if you would earn 9% from the market and lose 8% from debt interest , you will earn 1% interest but if you would clear your debt first , you would earn 9%interest nd use that 8% for shopping instead .
Reply:well you also have to realize, your investment gains are taxable income.. so say you make 9% in 2008,, you will file those earning as taxable income, so you only end up making lets say 6% instead of the 9%, now you would have been better off putting it down on your debt.. and if you actually have an 8% interest rate and think your going to return 15% per year to beat that.. good luck in this market buddy.
Reply:absolutely, pay off that 8% debt first
Reply:Let's assume your figures are correct.





You will pay some taxes on the income earned, so if that's just 15%, that 9% earnings is under 8% after taxes. If your debt is not tax advantaged, that alone is enough to suggest paying the debt first.





Another factor is that the 8% interest is a sure thing. Getting your money back from the market is anything but a sure thing, but at the very least, carries SOME risk of loss.
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