With credit card stuff, of which I’m guilty of having some hanging around, you’re really hard pressed to get better returns than the interest they charge.
Here’s the thing about investment/debt: I have sub 4% APR on my mortgage. I have a choice: do I pay an extra $18,000.00 per year toward the mortgage (and get taxed on the $18,000), or do I take $18,000.00 in deferred compensation and invest it in funds that historically return 15-20%APR (and get tax benefits due to the deferred compensation)? Assuming that things don’t go completely to hell in a handbasket, at the end of the day, by taking the deferred compensation, I’m well ahead of where I’d be putting that money toward the mortgage.
In and of itself, debt isn’t necessarily a bad thing. Stupid debt, like high credit card balances, are bad. However, things like mortgage interest and even student loan interest isn’t that bad compared to what you can make through investing. At the current rate of return, I’m expecting to double my investment every 7-8 years. If we keep numbers simple, and start with $10,000, that’s: $20,000 in 8 years; $40,000 in 16 years; $80,000 in 24 years; and probably ~$130-140,000 in 30 years. If you make that $10,000.00 every year, it starts adding up fast.
I’ll gladly take that over paying “double” at the end of thirty years on my mortgage, I’ll gladly take that over paying even “triple” at the end of thirty years on my mortgage.