A self-employed caller with $150,000 in savings asked whether to write a $17,500 check to pay off debts before marriage. The response was to pay everything off immediately and then clear remaining debts after the honeymoon. The combined household debt at the altar was $207,500, including $190,000 in student loans. Unsecured consumer debt typically carries APRs in the low-to-mid 20s, while savings accounts may earn around 4%, creating a consistent monthly loss by holding the cash instead of paying down debt. Reducing student loans early lowers the remaining balance and enables a faster payoff within a year given the household’s high income and a clear plan.
"“Write a check for $17,500 today and just pay everything off. And then write another huge check once you guys are back from the honeymoon and clear a bunch of these debts.”"
"“Any unsecured balance sits well above the about 4% federal funds rate. Card APRs typically run in the low-to-mid 20s. Holding $17,500 of that against a savings account paying maybe 4% is a guaranteed loss every month it sits. Write the check.”"
"“If you use that, now you're down to $74,000 left to pay off, making $281,000, and now we're done in a year.”"
"“If they keep the cash earning 4% in a high-yield account and the student loans carry a blended 7%, the spread costs them roughly 3% on the balance per year. On $190,000 that is real money flowing the wrong way, and it compounds while they delay.”"
Read at 24/7 Wall St.
Unable to calculate read time
Collection
[
|
...
]