Reply to S/O How to be comfortable with debt

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[quote=Anonymous][quote=Anonymous]You're contradicting yourself - in your first post, you said, "I'd rather have CC debt and significant savings if one of us were to get laid off" - so you couldn't pay off the $20k in card debt.  Now that same $20k "is a drop in the bucket."  Which is it?

If you have sufficient savings to live comfortably for 2-3 years, there is just no reason to maintain consumer debt.  It's not fine wine, it doesn't get better with age.  [/quote]

Actually money is like fine wine and can get better with age.

Again the stocks are EMERGENCY FUNDS. I would not want to pull money that is making money unless completely necessary. I woud rather keep the 50k in savings and dip into that if there were a lay off while my CC stay at 0% interest.  I would HOPE that  we could live off of 50K comfortably for a good 6 months until someone found a job.  Of course we have the money to pay it off, but when you have a large chunk of money often times it is best to not liquidate unless the debt is costing you more than the earned interest.  This is what is called making your money work. If we were laid off the LAST thing I would do is use money that is MAKING MONEY to pay off debt that is costing me nothing. Get it?  Let me simplify it for you:

No interest CC'd=deferred spending while your money makes money.

For instance

If I spend 20K on home improvements on a card that is 0% for 18 months, I stand to make approx 3K on that money in capital gains (which are taxed at a lower rate). If I had just shelled out the cash, then I would have lost 3K. Of course this is a losing situation if you are using CC's that carry an interest rate. [/quote]

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