Good Morning,

This is the Master Money Newsletter. We are your personal finance caddy helping you get that hole in one. Let’s tee off.

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Here’s what we have on deck today:

-Should You Pay Off Debt and Invest

-Jeff Bezos Is No Longer the Second Richest Man in the World

-Save a little more.

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It is the great personal finance dilemma. Should you invest or pay down debt.

You don’t want to miss out on the sweeeeeet gains of compound interest. But, you also don’t want that soul-sucking debt weighing you down.

Guess what? I got you.

This is not as complicated as it may seem. I am going to slap a simple framework on the table so you can just follow along with ease.

Then we can all skip into the sunset whilst building wealth. Let’s get jiggy with it.

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Step 1: Figure out what type of debt you have.

There are two types of debt. High-interest debt and low-interest debt.

🔺High-interest debt is what we want to get rid of as fast as possible. I classify it as any debt above a 6% interest rate. This is usually things like credit card debt etc.

🔻Low-interest debt is, you guessed it, anything below a 6% interest rate. This is usually your mortgage or a car loan.

High interest debt you want to treat like Miley Cyrus and come in like a wrecking ball.

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Step 2: If you have high-interest debt, prioritize that.

If you have debt above 6%, get rid of that before you start investing a big bankroll. The fastest way is to order your debts from the highest interest rate to the lowest interest rate. Then you attack the highest interest rate debt and pay the minimums on all the rest of your debts.

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Step 3: If all your debt remaining is low-interest debt then invest

But Dave Ramsey said….

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Here is the argument for investing with low-interest debt. The S&P 500 has historically returned over 10% to investors since its inception. Every time I bring this up I have to prove it so here you go:

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If you want to be conservative, and knock down a few percentage points to account for inflation we can say it is 7%-8%.

Let’s do the math.

If your mortgage is 4% and your investment returns are 10%, that means you are coming out on top +6% with that money. In that situation, it is better to stack cash and invest.

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Step 4: Evaluate your personal risk tolerance.

There is a caveat to this. If you just hate debt. It keeps you up at night. Then there’s no reason to hang on to it because it is “optimal”. Money should help reduce your stress, not be the cause of it.

So if that’s you, get rid of that debt and move on.

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How you sleep with no debt.

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In the News 📰

Jeff Bezos Is No Longer the Second Richest Man in the World. This guy is:

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Indian tycoon Gautam Adani, who has shot up the wealth rankings and now wealthier than Jeff Bezos.

He’s the founder Adani Enterprises Limited, is now worth an estimated $146.9 billion, while Bezos was worth $145.8 billion on Friday morning, Bloomberg reported.

He now only trails one man in world wealth: Elon Musk, who is worth an estimated $260 billion. Adani’s wealth has skyrocketed this year as his corporation now controls India’s largest private-sector port and airports, city-gas distributors, coal miners, and operates in a number of other industries within the world’s second-most populous country.

This is interesting to me because it is the first time, in a long time, that a tech tycoon was not on top of the list. Instead, it was a person who buys boring businesses. Sometimes boring is better.

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​He should also win the award for best mustache.

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10-second tip of the week ⏰

Save your windfalls and tax refunds. Every time you receive a windfall, such a work bonus, inheritance, contest winnings, or tax refund, put a portion into your savings account.

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​How To Painlessly Cut Back Your Expenses (Step-By-Step) ​

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