Скачать или смотреть 3-Step Debt Avalanche: Crush High-Interest Debt Before Investing 💥💰

💸💡 Debt vs. Investments: Should you liquidate to kill high-interest debt?

Summary:
The article presents a clear, data-driven stance: when your debt’s interest rate exceeds your realistic investment returns, you should prioritize paying down the debt rather than chasing market gains. It introduces the 10% Rule using a 401(k) loan as a cautionary example: paying 10.5% interest while investments return around 10% creates an unfavorable, high-risk situation once you account for job loss and liquidity constraints. The recommended framework is the Debt Avalanche strategy, with three actionable steps.

1) Kill the Loan: Immediately target any debt above 10%. If necessary, liquidate non-retirement brokerage assets (such as index ETFs) to lock in a near-guaranteed return from debt elimination. Remember to consider capital gains taxes and consult a tax professional about timing before selling.

2) Protect Your Base: Preserve your 6-month emergency fund. This liquidity buffer is essential to avoid falling back into debt during future income shocks.

3) Refinance Smartly: After addressing the high-rate debt, aggressively refinance other loans carrying high interest (e.g., 6.75%) to lower rates (even achieving ~5.5% can be a win). Choose refinance terms that maximize immediate cash-flow stability; lower monthly payments can accelerate the debt payoff snowball and free up cash for faster elimination of remaining debt.

Verdict:
Stop defending against high-interest debt. Use every available non-essential asset to eliminate rates above 6–7% first. This approach converts guaranteed returns into real financial freedom more quickly than market speculation. Maintain a robust budget so every dollar relentlessly supports debt reduction until your financial foundation is solid.

Note: The article emphasizes prudent risk management, cautions against over-reliance on 401(k) loans, and highlights tax considerations when selling investments. It presents a pragmatic framework rather than a one-size-fits-all guarantee, underscoring that disciplined debt payoff can outperform speculative investing in many scenarios.

Tags and related topics: personal finance, debt elimination, debt avalanche, high-interest debt, debt payoff, investing vs debt, 401k loan risks, refinancing, emergency fund, cash flow, budgeting, financial planning, tax considerations, capital gains, snowball method, financial freedom, wealth-building, mortgage refinance, loan payoff, risk management


00:00 Debt vs Growth
00:29 Roadmap
00:54 Why Matters
01:15 Disclaimer
01:47 10% Rule
02:31 Avalanche
03:37 Action Plan
04:31 EF First
04:59 Refi Path
05:33 Debt List
06:00 Methods
06:29 Quick Math
07:42 6-Month Plan
08:10 Quiz 1
08:53 Answer 1
09:13 Quiz 2
09:48 Answer 2
10:07 Key Ideas
10:38 Verdict
11:01 Wrap Up