Time for an On Topic post on debt evaluation and how debt can work both for and against you. :hay:
I’ve been running this around in my head for a while, and wanted to see if anyone had any references that may help this conversation get a bit more in depth. We all know the surface rules about debt. Debt is bad at high rates, and debt is good at low rates when you can use that money to earn money elsewhere at a high rate of return.
What I’m looking for is a method for putting dollars on a P&L to evaluate ones personal snapshot. I’m long past the time of being able to write off student loan interest, and carry super low rates on my auto loans. I have no credit card debt to speak of, so I’m trying to place some value behind the idea of paying of low interest debt, or redistribution of debt and equity within my home.
Of course, the corollary to the debt is bad argument is the present value of the money. My $1,000 payment today, 5 years from now will have a buying power that is considerably lower thanks to many reasons; however my payment against my original debt, will still be the same.
So in theory, I’m fine… at a basic level I know where I want to go, my question is how to I assess the actual bottom line because it isn’t as simple as 2% interest = good, 5% interest = bad.
And before anyone says it, I’m in the middle of a series of meeting with my financial planner however I like to be able to think through things on my own.
This probably could have just as easily been handled via PM as I’m sure the number of people that will have actual insight can be counted on the hand of a 3 fingered card shark. :walter: I’m sure it will be interesting for everyone though.