15% to 20% yield per year but only for some.

Hi AK,

Been a regular reader of your blog. Simply inspiring to me.

I merely have one question to seek your advice. I have approximately $30,000 of current liabilities (namely credit lines and long term debts) or what some would call unhealthy debt. 

I also have approximately $13,000 of assets in stock holdings. If it was you, would you liquidate your 6% to 7% yield assets to pay for debts that cost 15%-20%?

From an economical reason, it makes sense to ensure that you forked out as little money as possible to pay the cost of debts. 

However, spiritually, I was wondering if I ought to keep my yield generating assets in order to "force" myself to work harder to upkeep the debt and buy more assets.

For now, my job does pay me enough to meet my debt cost and investment capital. 

Would you do the mathematically smart thing and pay down the debts asap or build up the asset at the same time?

Hi J,

Compared to a 6 or 7% yield, if you were to pay off your debt, it is equivalent to generating 15% or 20% in extra money per month. This is money in the pocket.

"Once you get into debt, it's hell to get out. Don't let credit card debt carry over. You can't get ahead paying 18 percent." 
- Charlie Munger

What about being forced to work harder and all that? 

Be pragmatic. There is more certainty in money saved now than money to be earned in future.

Gambatte! :)

Best wishes,
AK

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