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Originally Posted by BzsBimmer
I guess I'm in the other camp.
The last two recessions I did that.. I paid off my loans with the cash I had on hand... and missed out on buying some really good investments, whether it was property or stocks.
I agree that paying off debt makes sense... I guess if you have the disposable income to pay off the debt and still have money aside for emergencies, sure (credit cards excluded or anything with high interest).
With these low rates and uncertainties, cash is king vs paying off something that is depreciating fairly quickly and has the potential to be extremely hard to liquidate if cash injection is needed fairly quickly. Everyone has their own priorities and financial vision.
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Sure, it all depends on your time horizon, appetite for risk and additional funds on hand. In my case, I’m taking funds from single stocks which are riskier but happen to be trading at all time highs and moving it into a lower, but less risky guaranteed return, which has the added benefit of lowering my needs for cash flow for fixed expenses. I’ve got plenty in another bucket of funds for emergencies and purchasing assets at depressed prices. Actually overweight on cash or cash equivalents at the moment, but I’m not working so not too concerned about it.
Paying off a car and recasting the mortgage reduces my burn rate on what i budgeted for taking time off and would actually allow me to put more money into investments when the time comes.
Also, we tend to hold on to our cars for much longer than average so depreciation isn’t really a concern. By the time I would be looking to get rid of it, it’s usually not even worth selling. Donated the last one to charity for the tax deduction.