Eugene, anticipating a $30,000 bonus, must choose between paying off his $22,000 auto loan or investing in his savings. With only the auto loan as his debt and a good income level, he ranks above average in financial stability. Although the stock market normally offers higher long-term returns than savings, it carries risks of short-term underperformance. This dilemma raises the question of whether becoming debt-free now might yield greater financial security than the potential investment gains in the future.
Eugene, who will soon receive a $30,000 bonus, faces a choice between being debt-free by paying off his car loan or saving/investing the funds.
While stock market returns can exceed savings over time, there is a risk of short-term losses, making debt repayment an attractive option for wealth.
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