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  1. This is something that we are currently debating. Right now our goal is to pay off the debts with high interest rates, and then invest the rest.

  2. moneybeagle says:

    If you're really torn and the idea of either one not happening really bugs you, then what about a split? Take half and invest it and the other half to pay off debt. Eventually you may find yourself more excited about one or the other, which could lead you to shifting your focus one way or another.

    • The only problem with that is if your debts are on the high side, and you''ll want to prioritize them. It could work if your debts are on the moderate side for sure.
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  3. John S @ Frugal Rules says:

    Good points & I think it largely comes down to personal choice & situation. I would tend to say paying off debt should come first so you can avoid interest and have a bigger sum of money to start investing with. I would tend to say that for many the mortgage should not be included though.

  4. I am in my late 30s, and though I have a pretty low mortgage interest rate, I am considering paying off my mortgage. I have total savings 3x larger than my mortgage balance, and could pay the balance using about 2/3 of my non tax deferred savings (i.e. savings outside of 401K), leaving a comfortable cushion behind. My motivations for paying off the mortgage are:

    1. Good old peace of mind
    2. Freeing up cash flow to help maximize contributions to a solo 401K

    Do you have a killer counter-argument against my plan? Thanks!

  5. I think it is always best to pay off debtsfirst before investing, that way you will not have anything to worry about when you start investing your money. If there is an extra left, then by all means invest it rather than spend on something you won't earn anything from.
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  6. 1stMillionisHardest says:

    I would definitely pay off any high interest debt over investing that money. If you're carrying credit card balances there's no way you're going to invest and top the 19 or 20% returns you'd realize by paying those off first. A mortgage is trickier, I have a real low interest rate on my mortgage, so right now I'm content to invest any extra money over paying down the mortgage faster.
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