Reply to How Much Would You Spend on a House?

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[quote=Anonymous][quote=Anonymous][quote=Anonymous][b]my god, it's surprising how people are having a hard time figuring out why it makes sense to carry low-interest debt.[/b]

if you owe 40 grand in student loans at 2%, it simply makes financial sense to throw (or leave) the 40 grand in the market, which you can expect to yield returns of 6-8%.  using the money to pay a loan that is essentially free money doesn't make sense. [/quote]

Everyone understands this.  It's more the principal of the matter - its debt.  It isn't deductible and you are having to pay someone to borrow this money.  You could also borrow through a heloc at a low rate and invest, but do you?

I realize some people don't mind carrying debt.  I do.  I wouldn't want to hang onto student loans just to earn a few extra thousand of dollars a year in interest.  It makes even less sense to me since I earn enough money that the spread is an insignificant amount of money.  I personally don't want any debt besides a mortgage.  We make too much money to have a bunch of liabilities over our head because we can cheaply borrow money.  [/quote]

I am not sure that the principal really cares. [/quote]

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