Pay Off : Lower or Higher Interest Loans

Your attitude towards debt will determine a lot.

Some may need to postpone paying off low-interest loans until loans above that threshold has been paid off.

A commonplace argument is that the long-term return from stock market investments will almost certainly outweigh the interest rate on a low-interest mortgage.

This might be the truth as per history, but keep in mind that paying down a mortgage is a guaranteed return on the mortgage’s interest rate.

However, stock overall performance is not always guaranteed. The general consensus is that loans with interest rates higher than 4% must be paid off during the debt reduction phase, whereas loans with interest rates lower than that can be stretched out.

The ideology is that the interests to be paid off are minuet/small. It barely affects your cashflow. That being said, paying it off is still necessary.

If you struggle with paying off your debts, you might want to look into budgeting. This helps you navigate around your income vs your expenditures.

We also discussed budgeting methods here > https://youtu.be/7QLiydNGFGw