How to balance paying debt vs. investing
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You should always pay off your debts. Take some responsibility and you better not hope someone is going to pay It off for you. The government isn't your mom.
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What about if you pay of the debt quicker wouldn't that leave you with more time to invest with more cash for future?
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You also need to consider how much of your monthly income your debt is taking. If it's too large, it doesn't matter how low your interest rate is. Consolidating and paying off that debt will improve cash flow and help your finances breathe easier.
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Live below your means and pay off all your debt first!!!
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Your country is ruled by samsung
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Disappointed you guys would accept a sponsor from Robinhood of all places. They are a scumbag company that burned many of investors.
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Schwab with think or swim is literally magnitudes better than robinhood. Same free price, but you can call the trade desk with questions, and atm fees are 100% reimbursed.
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Split the extra between creating an emergency savings and paying down debt. Set your savings goal based on monthly expenses & how constant/reliable your income is. Thiis savings is for emergencies, helping you to pay for these expenses and not increase your debt. Use the rest of the extra to toward debt. Split any "windfalls" (like gifts) similarly. Split bonuses a little differently to include a treat for yourself — something perhaps you've given up to have that extra for saving & debt. Paying down debt is very hard. Treating yourself to a pedicure or lunch out can make a big difference. I also had a piece of paper where I could see it listing my debt. When I paid one off, I did a happy dance & crossed it off the list. I also started with the smallest balance to make that first victory arrive as quickly as possible.
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Always pay your debt first
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20$ perday limit expense for meals
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Not sure why this is complicated: if you have a higher apr on your debt than you expect to get in return on investments then pay the debt first
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What this video fails to mention is in each Scenario 1 where you invest instead of paying down your loan, when it comes time to pull your money out of the stock market to pay against your debt, you are now subject to Capital Gains Tax (that is any money you made off your initial investment).
My advise, consolidate your debt into the lowest % and pay off the debt first! Invest afterwards. -
L + sponsored vid + assumes steady rate of stock growth + released on the eve of a recession + hairline recession + you're washed
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And what if they kick rocks and I don’t pay this debt? Cause at this point…
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If your finances are precarious, you might also want to look into investing in bonds instead. When the stock market does poorly, that can be correlated with a bad jobs market and layoffs, so your investment is losing money just when you need it most. But bonds (especially treasury bills) hold their value, and can even increase in value if the Federal Reserve slashes rates.
That said, you'll need at least $1000 to buy bonds, so if you're setting aside just a couple hundred every month give or take, it'll take some patience to get there.
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Don't listen to Vox sponsored by Robinhood Kids. Pay off your debt first. As fast as you can. Its liberating.
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Man, you see Robinhood as a sponsor and realise that this video will sell you investing scenario
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So, pay off the credit cards, let the mortgage and probably car loans ride
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The average person doesn't have the discipline to not rack up more debt
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Robinhood being the sponsor of this video shows it wasn’t an original idea it was a funded idea.
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imagine living p2p making 100k..?
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There is something about being debt-free that you cannot just quantify. (Not Verbatim) The tranquility and peace of mind if you're debt-free!
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You know this video is sponsored when they only talk about investing in the stock market, when there are other forms of investment such as bonds
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I feel that the tipping point would surely be lower than 7% percent. Especially with capital gains taxes and market uncertainty accounted for. But Robinhood probably didn’t want that included
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Dave Ramsey’s baby steps work by the way!! It’s not a fun way to live for the first 2 years, but you’re certainly living a peaceful life with lots of margin in the end and according to him you can’t invest UNTIL you pay your all debt (credit cards, student loans, cars loans, and personal). Basically everything minus the house/rent. Rent or housing should be 25% of your income and No more than 35%. If not your house poor and you can’t live comfortably that way.
By the way credit cards are the worst debt at 25-28% interest. Cars are next because people over buy because they can afford the monthly payment. But cannot afford the car it self.
This video is a nice, complicated math problem but the math is simple.
You shouldn’t be living with debt… you should pay that off, budget, stop over spending to impress other people, and then once you’ve cleared the margin… invest like your life depends on it!
My husband and I live that way and we are never stressed, have the income to go on vacations, live comfortably. I don’t care too much about the price of eggs. I eat out without shame. Why?! Because I don’t have car payments, credit cards, student loans… all that has been paid off and we have that income free for whatever we want. We are paying off the house faster, investing in retirement, and monitoring our spending but living well.
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This has been insightful
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Pretty huge error not adding money made from additional investments you can make after paying off debt as fast as possible. That entirely changes the calculus. The principles are still there tho.
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lost me at Robinhood ad
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Are you considering the inflation in these examples?
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I work in Finance managing investment assets for clients. I am personally working on a banking and insurance focused fund with 130k for one of our clients. Base and point, I’m invest professionally. I see the day to day of this kind of asset management. Returns are nowhere near consistent. The 7% figure shown here is absolutely foolish. At best small time investors in the S&P can expect 5% before taxes IN the long term. Over the course of a month, a year, or even a few years this isn’t true. Even a scenario of 5% is the best case over the long term, short term you realistically won’t make much. There is so much risk and volatility that I would highly recommend anyone with spare cash use it pay off your debts while keeping a reserve for emergencies. This video completely ignores risks and worse doesn’t even provide a realistic return rate. Your debt is locked in, you have to pay it. Returns are uncertain, they may not even keep up with inflation. Please first pay off your debts so you don’t have to worry about them anymore
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Are Trumpists tired of winning yet?
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What if you invest and lose 100% and also owe the extra $1000 of debt?
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GET. DEBT. FREE. as soon as possible. The power of compounding at 0 debt will outweigh everything.
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Anyone else stuck in 24% debt prison with no extra income to pay it down?
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Nonsense. Payoff all consumer debt, THEN invest with all the extra money. Baby step 2, people
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focus on debt only you miss investments, focus on investments you miss paying off debts.
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A video recommanding to invest your money sposored by robinhood, sure…
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Watching this is one of the most productive things I could have done today.
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wait we're supposed to invest? People actually have money?
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You're going about this wrong (0:15). Pay yourself FIRST, then use the remainder to pay everything else.
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Nice
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The timing of this video 🤣🤣
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There is psychology to it. Some people can benefit of feeling offloaded of the expense to pay debt. Other people might benefit of a more compromised balance sheet, as it makes less available for consumption. I guess this is more important than the savings difference at the end of the day.
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Hey Vox you definitely took a hit with credibility as soon as i saw this in video ad for robinhood gold 😂. Now im questioning everything I just heard. 😅
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Don't tell me what to do.
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Thanks for watching! We described a simple scenario here to break down the 7% guideline. But as a few of you pointed out, these scenarios can get infinitely complex. For example, once you pay off your debt, you have an extra $150 in your pocket every month that you could also put toward investing.
There's links to more resources on debt consolidation and how to start planning for retirement in the description of this video, and here's one from Investopedia I found particularly helpful: https://www.investopedia.com/articles/pf/08/invest-reduce-debt.asp
-Coleman
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5% for student loans definitely tracks for what I've seen with myself and others, but a balance that low would be a DREAM !
I owe more than 5 times that after having judiciously paid down my loans for a decade! For a while my calculated minimum payment under IDR was too low to cover interest capitalization. Now that I'm finally earning enough, and having paid off the private student loan with proceeds from participating in a clinical trial 😅, now I'm working on the emergency savings.
I'm glad two of my employers have retirement investment matches, because at this point it's going to take a while to manage $9k to $17k in must-pay emergency savings.
Gotta start somewhere I guess 😂
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So in other words, Pay. Your. Debt. It's always better to be debt free before investing.
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You need to put at the beginning of your videos on investment that ROBINHOOD is the sponsor for your videos.
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