Having credit card debt while also having money in Wealthfront is really weird.
Its' given me an interesting insight into the more nefarious side of American culture. Lot's of spam mail about weird loans I can use to get out of debt.
Loan to fix debt. Wat?
Experiencing debt arbitrage is also weird.
Yes CC debt is very very expensive. About $400/month in interest
Yes that's a lot more than theoretical returns on index funds (like Wealthfront)
So why not take money out and pay off my debt right away?
Well, the markets have been doing weird things.
Flop then rebound. Nov/Dec was rough. Went waaaay down.
Now it's coming way back up.
The CC debt has costed me about $1500 over the past few months. Wealthfront in the mean time has gained $7000
Now granted hedging 25% interest rate versus 7% average index returns doesn't work long term. Of course not.
I have reason to believe other means will help me pay off the CC very soon so it makes sense to stick it out for now.
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And it's a kind of culture shock in a way. Class shock maybe?
Here I am hedging different interest/return rates against each other like an asshole while just 5 years ago I was living hand to mouth hoping clients pay invoices before the rent hits.