Cruian t1_jeg6y2e wrote on March 31, 2023 at 7:52 PM

Reply to comment by JohnQK in There's no reason to pay more than the minimum for these debts, right? by [deleted]

>removes the payment entirely sooner, which increases savings.

Their savings would increase faster by using many HYSAs instead of paying at least some of these debts.

torunmetsfan t1_jeggvmn wrote on March 31, 2023 at 8:58 PM

The best savings account these days is probably 4% tops, so the amount saved between putting money there vs paying off the student loans is like $20 a month. I think the peace of mind of not having that debt over your head is worth $20 a month to most people, but it’s not wrong either way. There’s also the reality that most people will SAY they’re going to pay the minimum and invest the rest, but in reality they pay the minimum and spend the rest. Paying down debt is irrevocable forced savings.

Cruian t1_jegnknp wrote on March 31, 2023 at 9:44 PM

>I think the peace of mind of not having that debt over your head is worth $20 a month to most people, but it’s not wrong either way

It becomes a mathematical best vs possibly emotional best.

>There’s also the reality that most people will SAY they’re going to pay the minimum and invest the rest, but in reality they pay the minimum and spend the rest. Paying down debt is irrevocable forced savings.

Yes, self control is required, (edit to finish accidental early posting follows) but that applies elsewhere too.

torunmetsfan t1_jegtyz5 wrote on March 31, 2023 at 10:31 PM

Sure but there’s a mathematical/dollar value associated with having a better emotional state. And it’s such a small amount of money, it’s just not worth any effort/stress/time to arbitrage a $20,000 loan at 3% against a hysc at 4%.

Cruian t1_jegudlj wrote on March 31, 2023 at 10:34 PM

It depends on the person. I absolutely would put in the effort for example. Basically no extra stress, 5 minutes a month tops, can be done alongside my other banking already.

JohnQK t1_jeg7zmo wrote on March 31, 2023 at 7:59 PM

This is not correct. In addition, watch out for keywords often used by scammers, such as "HYSA."

Cruian t1_jeg8b1m wrote on March 31, 2023 at 8:01 PM

>watch out for keywords often used by scammers, such as "HYSA."

It's a relative term. There are options with higher interest rates than the debts OP has.

>This is not correct

How so? If rates drop again, below the debt rate, then it would make sense to pay the debt.

Edit: Typo