[nostrademons]

I actually think of it the opposite way: if you put money into paying down debt, you know exactly what the return on that capital will be. It's the interest rate on the debt (in pre-tax dollars for mortgages, after-tax for almost every other form of debt). Money is fungible; any money that's not locked up in debt-service is freed up for other purposes, like investing in other assets.

I tend to advise people I know to pay down debt first these days, because they're usually paying around 6-7% interest, and where else can you get a 6-7% risk free investment? T-bills are at about 3%, inflation-adjusted T-bills are often less, CDs are under half a percent, and savings accounts are basically nothing. You can potentially get more than that in the stock market, but that comes with additional risk, so for a lot of more conservative folks it doesn't make sense to carry a debt and simultaneously invest in the market.

[rsheridan6]

6-7% would be pretty high for a mortgage these days. I was quoted a little over 3% a month ago, and my credit is not the greatest.

For student loans, I agree with you, and I'm putting all my extra money into them while saving the bare minimum for a bit of security if something bad happens.

[tsotha]

>I was quoted a little over 3% a month ago, and my credit is not the greatest.

You have to consider things like origination fees and points, though. Everybody thinks they're going to stay in their new house for decades, but the average is something like four years.

[nostrademons]

Wow, maybe I should go buy a house. When my parents refinanced in 2004 they thought interest rates were historically low at 4.5%.