Should you pay down

[@msKita43]

I just paid off all my credit cards debt! Just a mere $4k student loan and I'm free!

[@Theoanno7]

Great job! 🎉

[@0Demiyah0]

Congrats! 🎉 Thats great

[@anebasammy]

This is amazing! 🤸🏾‍♀️ Congratulations 🎉

[@lolacole5653]

🎉🎉🎉

[@jlg7561]

You got this!

[@izy0321]

Ok just remember that the index fund isn’t guaranteed to return 8% every year. That estimate is based on historical AVERAGES over time. There will be some years it’s less, so you need to invest long term.

[@salehaljalal7893]

This is why I think a 5% rule is better. You can pretty much guarantee at least a 4% return on investment each year with safe trades, and if the market is low one year, you won’t want to be selling at a loss to pay for the debts

[@FoxInTheBasement]

Doesnt matter. Your paying so much more interest on short term debt than even getting a 15% return in a year. I have had a max 4k in credit card debt this year due to difficulties finding work outside of my control in the first quarter. Im paying 60 - 80 a month in interest i am guaranteed to have to pay presenting potential a grand a year if not paid down. Meanwhile if i paid 4k spread out over a year, at 15%, were talk at most a few hundred dollars

[@harmonicaveronica]

There are sometimes reasons not to follow this rule - firstly, if your monthly payments are high and you could increase you cash flow by paying off a lower interest debt entirely or by substantially shortening the amount of time you still have to make payments. Sure your car loan may be at 5% but if it's eating up $500/mo and you're making $2000/mo and you get a $10000 windfall, put it toward the car. Another good reason is psychological. My student loans are all under 7%, but the amount is $57k. I was really aggressively paying the higher interest ones pre-pandemic, and when payments were paused I just kept doing that but put the money in a high yield savings account instead. Now they're about to unpause and I have the full amount saved up, so I'm going to get rid of them in one go because I can!

[@TheDevler23]

Ok but how? I keep hearing invest and high yield savings account, but how do I even get started? Where do I go, who do I talk to? Financial advisors? Accountants? Apps? How do I start?

[@TheDevler23]

@@brucewayne3892 how do you find/pick a high yield savings account?

[@brucewayne3892]

@@TheDevler23 choosing a HISA, you should shop around at your local major banks. Then compare rates with online banks and credit unions. Choose the one with the best rate. Also pay attention to fees and minimum balances

[@thatindinkid]

​@@TheDevler23there are many HYSAs out there, Amex is around 0.2% less than the competition right now at 4% APY. But I'd recommend opening their HYSA to start building a relationship with them.

[@technolus5742]

She has literally done a short on that (search for: your rich BFF - How and what to invest!". Basically pick an account (like 401k or Roth Ira which you can only touch after you retire, or regular brokerage account), then open an account at any financial institution you are comfortable with: city, chase, bofa, fidelity, vanguard, schwab, e-trade,... Then you want to pick an etf (a pack of many companies stocks) such as voo (sp500) or qqq (nasdaq). Sp500 tracks the overall market, naadaq is more tech focused. Depending on your age there are options that most stocks and bonds for a certain target retirement date (your rich BFF also has a short on that topic). If you are 20-35, I'd say just get sp500 to start with, and regardless of your choice don't worry about short term fluctuations, just sit on it and wait.

[@carinarose8600]

I dont know about your country, but where I live I could open an imvesting account om ny normal bank and choose among some great global and local index funds. Talk to your bank 😊

[@junenam145]

Vivian, what would we do without you. Thank you, bestie, for helping us with our financial literacy every day! ❤

[@mrs.shanieekennedy2728]

Dave Ramsey turning in his grave 😂

[@KevinPerez-fd9xq]

Just learned something new today. 😅

[@Karoline-cd8vh]

Thanks Vivian, I'm learning and studying money because you inspired me 😘🤑

[@love_kristy.s]

Love your real straightforward advice 💚💚

[@OrdinaryDude67]

The borrower is slave to the lender. Living a debt-free life is fantastic. Pay of all your debt then every penny after that can go towards investing and you won’t be working just to pay interest to someone else.

[@geekworthy7938]

Gold advice!

[@transformativegreenspacest1898]

I Have had this question rolling around in the back of my mind! Thank you sooooo much!!

[@jackiecs8190]

that 8-10% is based on the risk-free rate of return, which is super super high right now. I would say 10-12% would be a better guideline for debt vs investment with fed funds rate over 5%

[@fishman649]

You also need to pay tax on stock market returns while paying down debt is tax free returns essentially.

[@booya6437]

Consumer debt goes immediately. Very few actual net worth millionaires advise keeping consumer debt around, regardless of potential investment payouts to offset interest.

[@dfjpr]

It's a good thing the market never goes down ever, or this wouldn't work.

[@simonewright1120]

Thk u Vivian...u r so kind

[@axpublisherdigital]

Thank you for this I really like your clips 👍

[@user-dv4yx7il7l]

🖤🖤🖤🖤

[@respectfullymama]

Not necessarily. The goal is to hit your minimum investing rate to make sure you retire with the amount you need/want. If there is a plan, you can effectively save and pay off debt.

[@avon5656]

Your advice is the 💣❤️❤️❤️..thanks so much

[@Corey-yg9ch]

Thank you! I was looking for this advice!

[@jeffrice3044]

Great advice, however, I would lower the estimated return/debt rate for the long term. Market gains worldwide will be flat, while the US will show lower returns but will be the best investment. Our economy(ies) are consumption based capitalism and the developed world is experiencing the smallest generations coming to age in decades. It's really hard to have growth when your consumer base is shrinking, even if you increase market share.

[@real00744]

Wish I knew this when I came into a lot of money

[@marshallmom1962]

GREAT advice!!

[@jameshorton3692]

This sounds great, but the average person that’s gonna have a significant amount of non-house debt isn’t smart enough to do this and should focus on paying off debt,

[@GetOfflineGetGood]

So pay off the credit card and then invest while making payments on student loans

[@silverstar4289]

That’s numbers. There is a mindset that needs to be considered. Kill your credit card debt altogether and you will feel better than “oooh! I have a 5%, credit card debt, but I am making 6% on my investment. I am a financial savant “.

[@micheley2140]

I like your channel!🎉 thank you

[@namedhuman5870]

But for investing there are broker fees and taxes to pay. You won't get the market return and you should pay down debt because that is guaranteed, returns are not.

[@panda_dva2261]

“Oh you should follow the 7% rule” just say “ok” then walk away. You leave them holding their tongue with a gut wrenching feeling in their stomach to explain what it is and not being able to.

[@transwomenaresexistmen]

Thank you!

[@andrewmccormick3553]

Pay off high interest debt first before anything!!

[@susanfurlong4048]

No credit cards, EVER. Designed to keep you paying them. Cash and carry, if not, you can't afford it!

[@Sheluvteo]

thanks

[@jirivacek8367]

Isn't the investment profit taxed? Shoud be less than 7% interest rate debt which is still beneficial to pay off before investing into index fund.

[@kalenagy]

thx BFF

[@nancypickering8217]

Great advice! They should teach this information in high school, say the 10th grade.

[@xavariusquest4603]

But it's not correct. It was a reasonable Rule 30 years ago. It has not been true since the 08 crash

[@xavariusquest4603]

Again...index funds returns are an average....right now that isn't true. With interest rates this high you're better off paying down debt. Given that mortgage debt is at best 5.5% and all other debt is much higher, this is a no brainier.

[@hossman3000]

That works great. In theory, unfortunately the majority of people can't save their money. They just blow all their access money like a bunch of idiots

[@shayemalone7378]

Earlier

[@Veronica-fx2pq]

I want to open something for my grandson. What do you recommend I do? So by the time he turns 18 (he is only 8 months) I want him to be able to buy a car or use it for college.

[@snailrat]

A 529 is a nice tax advantaged investment account to look into. The funds can only be used for education expenses, though.

[@LM-mg1km]

If you want him to use the money for other expenses besides school, get him a good paying certificate that allows you to add to it. And you may want to talk to a financial advisor that is fiduciary (meaning they have your interest in mind first) to see about investment options. Larger credit unions may offer one, I would start there, talk to tax advisor about tax implications etc.

[@harmonicaveronica]

A 529 for educational expenses. Otherwise, a regular investment account with an index fund is a good, solid choice. If you want something super stable (but won't grow as much), choose bonds! Treasury bonds are a pretty decent choice when interest rates are high

[@shayemalone7378]

Typo eay

[@lorrainerae9289]

I wish I could talk to you in detail about how to get these students loans paid off at just over 8% 😢

[@w.terrace5394]

The return rate was -7% last year. At least it felt like it.

[@karlaschmid8757]

That’s why you have to invest for the long-term, the 8% is average.

[@ProfessorOfLogic81]

Find a credit card with 7% interest

[@tamaramcrae4037]

Trust me on this: pay off your debts FIRST then invest. Now I have more debt on top of my new debt lol

[@dfjpr]

I'm a millionaire, please give me advice on how to get rich.

[@shayemalone7378]

I have a student loan well losns since 93 and have to pay them. Well I stop paying them for financial reasons I had none. Now they're in default or worse I need advice. Help and they're high interest rates.

[@renezuniga6525]

Ive got no debt. And Saving up to buy a house when the market turns. but in the meantime, how do I get started investing like how you're saying? Iv been messing around with webull but nothing big. How shold be investing.?

[@williamwhite5457]

So when I win the lottery…..I’m gonna have you take care of it for me

[@xavariusquest4603]

Find an actual pro

[@halfaway_]

What's a good amount to start out with when it comes to that? Like if I had 1k from a windfall, I'd only have enough to pay off certain debts

[@harmonicaveronica]

Step 1 is actually an emergency fund. If you don't have at least $1000 saved up, your odds of getting into high interest debt again is a lot higher. Step 2 is paying off high interest debts. If you have anything you can wipe out entirely, choose that for the satisfaction of getting rid of a debt (and hey presto, suddenly you've got an extra bit of cash freed every month that you can put toward extra payments on other debts!). Otherwise, just take a chunk out of whatever has the highest interest rate. Technically speaking, going after the highest interest first saves you the most money in the long run. In practice, going after the smallest balances first ends up being the better financial choice for many people because it helps build momentum, so they're less likely to give up on chipping away at their debt. Step 3 is actually not investments or lower interest debts, but saving up a bigger emergency fund that will let you survive if you are out of work for 3-6 months. At that point you have way more flexibility and it makes sense to start investing! Retirement accounts are absolutely the most important. Don't mess around with other investments until your retirement accounts are funded. You may want to start investing in retirement accounts a lot earlier (steps 1-3) if your employer offers a 401k match - sacrificing 5% of your take home pay is almost always worth it to get free money!

[@Sumlee94]

What if they are all above 7?

[@loh1870]

Are you a millionaire or ..🤔

[@averykleon]

Is this compounded?

[@rollinggreen5125]

how about 5% mortgage? invest or pay off mortgage first

[@karlaschmid8757]

Invest, because on average your 8% will beat the mortgage rate. Plus the mtg interest gives you a tax shield.

[@xavariusquest4603]

Here's a better answer. It depends. Depending upon the size and age of the outstanding mortgage, the tax deductions are reducing your taxable income....maybe significantly enough to make keeping it worthwhile Think this way. There's a cost and a benefit to keeping the mortgage. If you pay it off, you don't have the monthly payment. Fine. But you also lose the tax deductions. If you have to use the large pot of money you've received then your potential investments will be limited to how much you can shove in every month. So, it could take a decade to invest as much as you could invest today. And you no longer have the right off for taxes. If you keep the mortgage you can lump the big wad of cash into investments and start them growing immediately. After 10 years, you're way farther ahead. This is called opportunity cost. To take advantage of an opportunity, you have to eat the associated costs. Remember...everything has a cost.

[@marxyogurt]

As a millionaire, I suggest not coming into your money

[@justintime4174]

Why 7%? Because 7 is a lucky number

[@Lola.y.KillaKash]

Haha there are no low interest debt if you habe credit cards

[@tiffanyc566]

What is the best way to invest your money . I have heard about Roth IRA but idk anything about it. I want to set aside money and have it grow over the years

[@harmonicaveronica]

There are two main types of accounts: 401k and IRA. If you have an employer-sponsored plan or are self-employed, you can invest in a 401k. If your employer offers one, they probably offer a match, which means that if you contribute, say, 3% of your paycheck, they'll give you an extra 3%. Regardless of your access to a 401k, you can invest in an IRA as long as you don't make over the income limit. The maximum amount you can contribute to a 401k is $22500 per year, and the maximum amount you can contribute to an IRA is $6500 per year (the IRS changes the contribution limit each year). Both 401k and IRA have traditional and Roth options. Traditional is pre-tax, which means that either the money is put in the account before taxes are taken out of your paycheck (401k), or you deduct the amount from your taxes when you file (IRA). Roth means it's post-tax. You want to choose traditional if you are mid- or late-career and making more money now than you will be taking out of your investments later. You want to chose Roth if you are early in your career and expect to make more money later in your career and your retirement accounts will pay you more than you earn now. Often, people have a mix of both!

[@Veronica-fx2pq]

Please help

[@cloudbenson8766]

I would marry you in a heartbeat pretty lady!!❤

[@minghuanlu4451]

Meh she didn’t factor in taxes so don’t follow that rule lol

[@user-gj2fk1sw1u]

Orrr pay off ur debts then invest