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Investing while still having debt

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jeandearme

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I have around $9k of debt and $5k in cash - I pay only what I need (credit card), nothing more because in this times if something happens I'd rather be able to just get the cash out and run.

My question is: should I invest some of it into stocks to accelerate it? I've seen a thread by GreyCode and not sure what to think. I start to feel FOMO because I hear that everyone jumped on that train and getting really nice results. So far I was like 'stick to what you actually know', but given that I'm software developer too I have no more excuses.

Would love to hear some opinions on this.
 

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Odysseus M Jones

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I start to feel FOMO because I hear that everyone jumped on that train and getting really nice results.
Don't do it, you'll lose your shirt.
When you hear people talking about how much they made it's time to get out.
No one talks about this at the beginning of a move it's always when they're ready to unload.

Devil take the hindmost.
That's a good book btw
 

amp0193

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I have around $9k of debt and $5k in cash - I pay only what I need (credit card), nothing more because in this times if something happens I'd rather be able to just get the cash out and run.

My question is: should I invest some of it into stocks to accelerate it? I've seen a thread by GreyCode and not sure what to think. I start to feel FOMO because I hear that everyone jumped on that train and getting really nice results. So far I was like 'stick to what you actually know', but given that I'm software developer too I have no more excuses.

Would love to hear some opinions on this.
Dont do it.

keep the cash or pay off the debt.
 

Tossek

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Hi Jeandearme,

it is a great question. And the answer is quite simple as mentioned before: Try to minimize the debt while keeping some extra cash for emergencies. I can recommend here Dave Ramsey's approach of how to deal with debt, but in a nut shell: Tackle the smallest debt amount first, not the highest. His approach is trying to minimize the complexity of the problem while generating small victorious steps easing the money pain.

Why is this the usual and most sane to go? Because, if under some unlucky circumstances you lose your money in the stocks, you will be still penalized by the debt interest. Mathematically it does not make a difference if you kill your debt interest or make the same amount from your wins in the stock market. However, on one side your loss can be quite high as well. Option trading can be a magnitude riskier than stock trading. So why risk it before you are "free"? I know fastlaning is a question of taking risks to create value and thus get a lot of income. Thus, I think that there is a ok situation: If you take a small (!) amount just to play around and learn the game to minimize your future risk if you want to walk this way down further the road. But I would calculate this money as already lost money just to be not emotionally attached.

I know that the monetarian wins like the ones from Greycode might be impressive. Still, it is very risky and people lose fortunes this way. Remember: if you get burned, you will never be on FIRE. Pun intended.
 

foodiepersecond

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This really depends on how much you make monthly and your monthly costs. 9k debt in the spectrum of debt isn't much and if I can assume, software devs can do alright as far as salary? Also, what how much interest if any is occurring? I would gauge all that first and see how long it would take to pay off the debt without that 5k.

The investing part can be lucrative, but I tend to follow Mark Cuban's suggestion that any money you put into stocks is money you are willing to lose. You can do safe investments that will grow in a long time or the big risk/big reward approach.

I can't really tell you to do it or not. That is just my mindest atm. I put a super humble investment into stocks because my debt is bananas and I don't make nearly as much to comfortably pay it back.
 

minivanman

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Actually there was an article about Buffett the other day and he was telling people to pay off their credit card debt first because even he does not know how to make 18% interest in the stock market.

There is always that 1 person that wins big while the 999 others go home with their tails between their legs and broke. Are ya feelin lucky? :run:
 

Lyinx

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I have around $9k of debt and $5k in cash - I pay only what I need (credit card), nothing more because in this times if something happens I'd rather be able to just get the cash out and run.

My question is: should I invest some of it into stocks to accelerate it? I've seen a thread by GreyCode and not sure what to think. I start to feel FOMO because I hear that everyone jumped on that train and getting really nice results. So far I was like 'stick to what you actually know', but given that I'm software developer too I have no more excuses.

Would love to hear some opinions on this.
Is your debt in the credit card? or outside of the card?
If it's in the card, then pay it off!
If it's outside, then there's a lot of options... see other comments, they know what they are talking about.

I have personal debt on my own, and I'll invest more dollars (more debt) which I gradually pay off. This is not exactly fastlane approach, but it works for me, and I'll be cash positive in a few years :)
 

UnrealCreative

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You could make even more money if you use margin. Margin let’s you leverage your money.

Best thing to do would be to sell naked options contracts.

It literally cannot go tits up.
Found a fellow autist :praise:
 

peterb0yd

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I was in your shoes exactly about 4 months ago.

I had $12k in credit card debt from various business expenses that I couldn't pay off. It sucked big time. I was a freelance software dev and was hating my client that I had to work with. I was in a mental and financial rut and would do ANYTHING to get out of it.

I decided to suck it up and get a full-time software job. Having never had a full-time job in my entire life, this was not an easy thing to do.

With my paycheck last week, I finally paid off the remainder of the credit card debt. Felt great for 10 minutes. I still have about $11k in student loan debt to pay off, so I'm not finished. But it's not nearly as bad as credit card debt. 20% interest is no joke.

If you don't have a good stream of income already to pay off your debt, then get a job and pay it off slowly.

It's not sexy, but it works. It lets you focus on your fast-lane venture without constant worry that you're going to go broke.

Invest in the stock market? If you don't know what you're doing, you might as well just go to the casino.

That's my 2 cents. Good luck man.
 

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Kak

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You don't have enough money to make a meaningful difference with investing. If you had more money you can look at it like this...

What is the interest rate on your debt? What are your expected returns?

If it is a car loan or something at 2% that is different than a credit card at 25%.

Even if you are a pro investor, and you're not, you are not going to outpace your credit card's interest charges.

If you do have a high interest credit, try a balance transfer to a 0% card.
 

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