- Put it in my savings account for my trip to Japan next September, or
- Pay off my 18TB HDD (900 bucks) and get rid of all the upcoming installments ($100/month), or
- Other
Either way, my monthly balance stays the same, I think. I’m really bad with money. 💀
If the savings yield less % than the installments pay in %, pay off the hard drive. Otherwise… don’t? I dunno seems like a math question
Bad at money, bad at math, GREAT at linguistics… 🤓
There is a $100 difference/leftover: the disk is 900, the refund is 1000. And if I’m putting aside 100 per month anyway for savings, then it feels like I should pay off the drive. 🤔
The advice above is correct. If the rate payment is without extra cost, you got a loan at zero percent interest. Even if your money is just in a savings account, the payment loses in value each month at you pay infinitesimally less every month in terms of what you can buy with that. If you put the money into savings, assuming broad market index funds (etfs), that’s about 7 percent you earn on that per year while you pay off the rates. Well just 8/12 of that, but still…
I’m debt free and i prefer it that way, but I also know i pay a big price for that over thirty years.
You probably should, debt is only worth having if you are certain you can pay it and it’s below the inflation value. I financed a phone that I could pay because at 0% interest, the value of the monthly payment is less today than it was the month I bought it.
Moneys. Math.
Your take isn’t quite right. Debt is only worth having when the long term payments are less than the long term value. Value is not just money, but don’t lose sight of money. Dept is automatically paid off when you die, which is sometimes a consideration though only rarely. However in between the question is what could you do with the money going to payments instead.
Buying a house - most of your payment would go into rent anyway and you have to live someplace. As a general rule of thumb if you will live in the same place for at least 7 years buying is better, but YMMV. When the house is paid off you live there rent free.
Buying something for your business - check with an accountant, but you should be able to make enough money with it to pay it off and make a nice income.
Buying collectable art. I’m not against it, but it is common for art values to collapse as what is “in” changes. It is also common for tastes to change. Thus not a thing even if you can afford the payments.
Inflation devalues debt relative to most growth assets tbh
The problem is the math is correct on paper. However in the real world people who do the math tend to not translate correctly to the real world - they see the math and they don’t save anything while also keeping the loan. People who hate debt are more likely to pay it off, and then put something into savings so they don’t have to get more debt later.
Lesson: hate debt.