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Jan 10, 2019 16:06:10

Thing about myself

by @swizecteller | 227 words | 🐣 | 116💌

Swizec Teller

Current day streak: 0🐣
Total posts: 116💌
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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.

2 replies 0 retweets 1 like

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.

Very strange.

Hashtag blessed?

Originally published at twitter.com

  • 1

    @swizecteller Having revolving credit card debt with interest means you are paying to rent money. This is not a good strategy to build personal wealth. In addition to the financial issue, the debt is also a psychological weight that I have personally felt lifted when I paid off all my credit cards years ago. I still use them, but I pay them off every month. I'm glad you have some additional cash for investments. Hopefully, you also have a liquid emergency fund established for a rainy day.

    Brandon Wilson avatar Brandon Wilson | Jan 10, 2019 17:24:45
    • 1

      @brandonwilson I agree having credit card debt isn't great but in this case it's very temporary. I'm waiting for a late invoice to be paid and that will pay off the CC with plenty to spare. I just don't want to take money out of long-term savings to pay it off considering it's so temporary.

      Should the invoice never come, however, it will make sense to take money out and pay it off. Takes about 3 days to pull off when I decide I need the debt to go away :)

      That's the benefit of liquid long-term savings I guess. You can always access the money when you need to.

      Swizec Teller avatar Swizec Teller | Jan 11, 2019 08:38:42
    • 1

      @swizecteller Glad to hear it's temporary. At least you are not "essential" staff working for the US Government and not getting a paycheck today.

      Brandon Wilson avatar Brandon Wilson | Jan 11, 2019 15:20:13
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