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Author: cutchemist42 Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 308724  
Subject: Pay off (% line of credit or invest first? Date: 8/22/2012 1:28 PM
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I have about $4000 due on a line of credit at 9%, is the market currently returning something better then 9% annually? Or should I just pay off the loan first before investing?
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Author: FlippoHip Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 305780 of 308724
Subject: Re: Pay off (% line of credit or invest first? Date: 8/22/2012 1:33 PM
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I would pay off the debt first, no matter what the market is doing.

You can also lose your money in the market. If you were debt free, that wouldn't sting nearly as much as losing $4000 that you still have to pay back to the bank.

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Author: vkg Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 305784 of 308724
Subject: Re: Pay off (% line of credit or invest first? Date: 8/22/2012 6:27 PM
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What do you have for an emergency fund? It is unlikely that you are currently going to be able to make 9% after tax returns, but you also need an emergency fund while paying down debt.

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Author: MetroChick Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 305792 of 308724
Subject: Re: Pay off (% line of credit or invest first? Date: 8/23/2012 10:11 AM
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Depends what you mean by "investing". If you're eligble for a company 401K/403B with matching that you're not currently contributing to, I would contribute up to the match. But after that, I would use any available extra monthly income to pay off the $4K.

The stock market is pretty high right now, so you're probably not missing out on a great buying opportunity.

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Author: joelcorley Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 305805 of 308724
Subject: Re: Pay off (% line of credit or invest first? Date: 8/23/2012 4:24 PM
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cutchemist42,

You wrote, I have about $4000 due on a line of credit at 9%, is the market currently returning something better then 9% annually? Or should I just pay off the loan first before investing?

Over the long haul the stock market hasn't beat 9% - and that's before you consider taxes. You'd have to take considerable market risk to beat a 9%, with no guarantees.

I'd just pay off the $4,000 and then invest at regular intervals ... like with each paycheck.

- Joel

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