Thursday, October 11, 2007


Or, On Loan Repayment

Wal and I went to a very expensive university (one of its few qualities no one ever questions). We both got partial scholarships, still leaving a sizable sum. He was fortunate enough to have parents who paid the remaining balance outright, leaving him with no loans.

I was not as lucky. My parents paid the majority of what was needed, actually, but I still took out several education loans in my name. Thankfully, I have gainful full-time employment right out of school (thank you, engineering degree), and also have been helped out by one of my relatives, so that I am in a position to be able to repay my loans. full.

Now that the car situation has been put on standby, I have made the decision to repay my loans now. Several sources (including my lovely parents) have pointed out that for those with interest rates less than possible ROIs, I should invest the money instead.

My response? Oh, hell no.

I understand how that works, but I feel fundamentally uncomfortable with it, for many reasons. First, our economy totally sux0rz now. I don't think I can "rely" on a certain performance. This summer alone has been ridiculously unstable. Secondly? Financial freedom. If an emergency comes up, or I no longer have a job, I will not be in debt and without money. (Since the returns wouldn't be as good on the short term anyway, then it might not even work out, math-wise.) To me, amateur investors taking sketchy risks which might leave them actually owing money? Not a good plan, and not how I want to start out. (I have many rants about amateur investors, including myself, but those I'll save for another day.)

I talked to Wal about it, and he agrees with my position. I want to strive for "reasonable" over all else in my fiancial plan (you know, rather than chasing one big winner or being greedy, etc), and this works in support of that.

Simplicity is also very important to me. I am not particularly keen on putting in more effort than is necessary in this area, and here's another way to avoid giving myself another big obligation - with dire consequences if I screw it up.

I've got a lot more to say on investing and finances. But for now, I've paid in full the loan that went into repayment, and working on my strategy for the two still in their grace period. I should be 100% debt free in less than two months.

1 comment:

Walrus said...

As you said, I heartily agree. You never hear any horror stories about people paying off debts too early. Nobody ever looks back and says, "Boy do I regret not undergoing the extra stress and paperwork to risk a marginal profit that rides on the volatile market's erratic gains staying above my set interest rate."