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My $26,000 Mistake Of 2011

My first full year of self employment in 2010 was great. I exceeded my goal to earn $150,000, I sold my first website in a six figure deal, I successfully launched my first info product (along with several others) and I generally had way more fun facing the challenges of self employment than I did in my old sales job (despite the downsides I’ve mentioned before). Now as we’re almost halfway through 2011 I’m constantly thinking about my goals for this year and doing everything possible to ensure I meet them; however, I made one huge mistake early in 2011 I’d like to share with you.

My $26,000 Mistake Of 2011:

I was riding high, had plenty of money in the bank and because of that I decided to pay off $26,000 worth of student loan debt from my wife’s masters degree back in January. Both loans were around $13,000 each and at 8.9% and 7.9% interest rates or something really high like that (interest rates for loans on post graduate programs are way higher).

Why Was This A Mistake?

I gave up liquid cash that I could have used to invest in my business for a sure thing that my wife and I would be paying roughly $300 a month less in student loan payments over the next 10 years. For years I’ve always been told that paying down debt is the right thing to do, but I believe when you’re trying to build your own business this attitude isn’t always the best. I believe I can always make more than a 8.9% return when I’m buying websites or other web based assets and for me to give up $26k so that I could have less debt was incredibly stupid.

Example 1: I buy a website for $25,000 that’s earning $1,000 – $2,000 per month (1x – 2x earnings multiple).

Even on the worst case scenario of a 2x earnings multiple a website I purchase for $25,000 making $1,000 a month without improvements to the monthly income (there always would be) I’d already be coming out ahead an extra $700 a month. Yes there is risk in any investment like websites, but with such a short payback period I believe I still come out behind by deciding to pay down debt instead of investing in my business.

What Do You Think?

I hate to woulda shoulda coulda because I believe that attitude is for losers, but I wanted to share my mistake because I believe I’ve learned a valuable lesson. Now what I’m not advocating is that you should buy that $1,997 course you’ve seen guru’s promoting because you can earn $50k per month by pushing a big red I’m an idiot button instead of paying your credit card bill. But when it comes to investing, if you know you can make something work (in my case – buying websites) then it’s probably a mistake to pay down debt with cash that could be used for investments instead.

Yes I know this blog is about making money on the internet, but what you do with your money offline can have just as big of an impact of how much you can earn offline. I really do want to hear some feedback on paying down debt vs investing so don’t be lazy and read this without commenting.

See you down in the comments.

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70 comments… add one

  1. Interesting perspective. I think you could go either way on that. I was in debt for years, so when I finally paid it all off, I made the decision to never put myself in that position again. Ever since, I’ve taken the position that if I can’t pay cash, I don’t need it (house and car being the only exceptions). Not having any debt is quite liberating and puts you in the position to do other things that you may not have been able to otherwise.

    That said, I don’t disagree with your position either. Especially when you’re self employed, using your cash effectively is extremely important and the case can certainly be made that you could have made “better” use of it by investing it back into your business. There’s more risk involved in doing so, but that risk is mitigated by the likelihood of success in that investment, so it’s not a clear-cut decision.

    It all comes down to one thing: there’s no right or wrong answer. When it comes to personal finances, the “right” decision is relative to the priorities of the person making it. I probably would have done the same thing you did and paid off my debt. It doesn’t make it the right answer, but look at it this way: Even if it was the wrong decision for you, it’s not really going to hurt you. You no longer have the cash to invest, but you also don’t have the debt anymore.

    Reply
    1. Hey Kevin,

      Great insights and I think this is a crucial point you’ve made:

      It all comes down to one thing: there’s no right or wrong answer. When it comes to personal finances, the “right” decision is relative to the priorities of the person making it.

      It’s just something that’s annoying right now because I feel pretty strongly that I can make more with the cash than the debt costs to carry. So that’s the main reasoning behind the stance I took.

      Reply
      1. I had pretty much the opposite experience to you Chris, I created a successful site, worked hard for 8 months or so then sold it for $20k. I had a business loan of around the same amount, but I thought, hey I’ll just reinvest in a new site.

        Turns out the next project needed a lot more than I had to get it off the ground and didn’t really take off (yet) or generate any revenue, so now I’m paying off the debt (not really a problem as I have decent income) but wished I’d just nuked it with the $20k in cash I had.

        So don’t regret it too much – you can always make more money!

        Reply
        1. Hey Tom,

          Yes it’s a take a risk vs no risk approach and I still like that you decided to take a risk even if it didn’t pay off this time.

          Chris

          Reply
  2. Interesting post Chris! Ive never thought about it like that. Without reading this I might have made that mistake too.

    Reply
  3. Great post. Now I’m really considering this same predicament. I just sold a classic truck and planned on paying off a high interest credit card with it. But investing in the business makes a lot of sense too. I think this credit card really needs to go, but this makes me think a lot. Great point of view!

    Reply
    1. Hey Randy,

      Yah that’s the tough thing. If it were credit card debt I wouldn’t even be writing this blog post but instead it’s “only” $26,000 out of the $80k in total debt that my wife had accrued from her master’s program.

      In your case I’d think that depending on the interest rate (I’m assuming it’s like 15% or more) that paying it off makes more sense.

      Reply
  4. I could go either way on it. There is a lot to be said for not having that $26,000 hanging over you. For us, the big value in paying it off would be greater peace of mind for my wife :) She knows with her head that the math makes sense, but every other part of her just feels better with no debt. I’m a little bit the same way. $26,000 is a lot of money. It’d be nice just to get that knocked out.

    Reply
    1. Hey Shane,

      Yah it is nice knowing that for sure I will not have $300 something per month to deal with for the next 10 years and that’s something certainly worth saying. We considered paying off the car instead which we owe about $13k on at $420 a month payments for the next few years but because that’s the lowest interest debt we have (So annoyed by how high the interest rates are on her student loans) we decided against paying that off even if it feels a little better not having that monthly amount.

      That being said, I would love to have another big exit and pay off all the student loans, the car and be able to buy a house in cash but I’d still have to think about the lost opportunity cost from the cash that was tied up in a house.

      Ahh the joys of personal finance :D

      Reply
  5. Paying off 26k of debt has to feel good, even if you think that the money would have been better used in buying an asset.

    My question is this: Did the 26k pay off ALL of the student loan debt? If it didn’t, I would lean a bit more towards your idea of investing the money in my business. If the 26k DID pay off all of that debt, that’s great! One less thing to worry about and even less negative interest accruing on your net worth.

    You do make a great point with this post, Chris. It’s made me even think about how to change my approach to some things in regards to paying off debt and building money making assets.

    Reply
    1. Hey Chris,

      That’s something I should update in the post. The total debt was about $80k ish so we still have something ridiculous like $800 a month in student loan debt from her masters program to pay off. Her day job pays $500 a month of it for the next 3 years though so we technically only need to pay $300 a month which is nice.

      I’m assuming that I’ll continue building a solid business mix of various website projects etc and when they stop paying $500 a month of her student loan payments I’ll probably do a lump sum payment at that time to knock out the rest (if I don’t really need the cash for investing that is).

      Reply
  6. Great info Guthrie, I’m thinking through the same scenario right now. The issue being time and effort needed to achieve that 10% return rate. Also known vs unknown. Still great advice.

    Reply
    1. Hey Patrick,

      True true – what are you thinking about buying a place or paying off your student loan debt?

      Reply
  7. I think the decision to buy a website that produces income would have been a better choice then paying off the student loan, but I would not do the same if I had credit card debt like Randy noted. There is just something nasty about having credit card debt.

    I did some similar calculations, but purchased real estate because that’s what I know best right now, but websites are on my list as well.

    The other thing is how much longevity does the site have?

    Reply
    1. Hey Artur,

      Yes it’s tough because the example website I was discussing is just that – an example; however, I’d be operating under the assumption that the website would be viable enough to pay back the entire cost and by that time period be able to be sold for a larger payout or continued to be run for the next few years (that said search engines are always changing of course).

      Real estate here in Seattle is still a tough investment decision. I’m a big fan of Patrick.net and his attitude of rent vs buying unless you can buy a house and rent it out at a price high enough to cover the mortgage payment.

      (In my case we’re renting a house for $1,800 a month that’s listed for sale at $500k right now and not only would I need to drop at least $20k to cover the minimum 3.5% downpayment but I’d also be paying $400 a month in mortgage insurance, around $2500 a month on the mortgage and that doesn’t include any additional repairs that we’d do)

      I do know there are good opportunities for buying real estate in other markets though. My cousin from California purchased 3 houses in Tennessee for about $30k each and currently rents them out with a positive cash flow.

      Reply
  8. You could’ve bought the website for 25k and then used that money it earned each month to pay off the debt and hopefully even have some extra income :)

    But the thing is, with 25k websites thats pretty risky to go into, lots of Flippa users are lieing about stats and income reports so its not always this easy..

    Reply
    1. True, but I try to avoid buying on Flippa. My best deals are from unadvertised buys :D

      Reply
      1. “My best deals are from unadvertised buys”

        So what’s the best way to find such sites that are or may be for sale?

        Reply
        1. I’m working on something that covers just that right now. I’ll keep you posted…

          Reply
  9. I think you did the right thing. Folding money back into the business is a great idea but keeping debt low and under control is a great mindset to have. Leveraging debt can cause more problems than it solves, just look at recent economic history. So Bravo. By the way, paying off student loans to the gov is great for your credit score rating. So when you go to get financing for a home or a business, your credit will look great. ( I was a loan officer for 4 years in a prior life)

    Now all you have to do is go back and run your business and teach guys like us to go out there and do the same.
    Stay well!

    Reply
    1. Hey Claude,

      Yah I should update the post to mention it didn’t cover all of her student loan debt, but we did get our credit scores back and I believe we were at like 774 or something which I believe is pretty decent.

      Yes, I’m working on some things to provide more useful information at a regular pace for readers of the blog so be sure to stick around heh heh.

      Chris

      Reply
  10. You could have taken a homeowners loan (if you own) or a small business loan at a lower rate and paid it off. Or just refinanced. Or paid off part and used the rest for a site. Personally I wouldn’t spend 25k to get rid of 300/mo debt but a lot depends on how much cash you have in the bank; if you have a lot then def pay off debt but dont spend all of your savings.

    Reply
    1. Yah, we currently rent right now and that is something to think about regarding the small business loan. I’d be very interested to see if their interest rates are lower than her student loans because if they are lol then perhaps I should take out a small biz loan and use the cash I’m saving in the bank to pay off the rest of those instead hah hah.

      Besides, I do know that student loans are the only form of debt that you can’t get out of by going into bankruptcy (not that I’m about to or anything but it’s always good to have a plan lol)

      Reply
  11. Its 26.000 dollars less to worry about.
    Also you don’t have to “work” to make a return on that 26,000 investment into your business.

    But nice going! If you want to know how it feels like to pay it off slowly, i’ve got another 30k worth of University Debt for you if you are interested :)

    Reply
    1. That’s true “not having to work to make a return on that $26k investment” I’m in the process of really trying to evaluate what direction to take my business moving forward and that’s something I plan to address in an upcoming blog post.

      lol, as for your student loan debt – perhaps if I build the next Twitter or Groupon lol.

      Reply
  12. As you said Chris, it all depends on the person, most people don’t have the business acumen to do better with their money than paying off debts.

    For most people if they get some kind of pay out, it’s generally smarter to just pay of high interest debt, unless they know they can turn it into more.

    I agree from what I know about you, that you could have turned it into a lot more.

    Reply
    1. Doh! (no woulda shoulda coulda’s though heh heh)

      Reply
  13. Hey Chris,

    I like your numbers!! I think I need to sell websites…Oh I gues I would have to be able to build them first. But anyways if you pay off the loan early don’t you save a bunch of money even if for now your a little short?

    Reply
    1. Yah, but the argument is that I could make more investing instead of just paying down debt…

      Reply
  14. Hey Chris,

    It takes time to set up a “good” website. We bought a couple a few weeks ago, and the day seems to just start and it is time to go to bed that I still haven’t been able to get to a few. In the end, building websites is a slow process. So is debt in some ways, but it costs you more in interest. Building quality sites is what counts these days, than slap stick sites. In tough economic times, it is best to get out of debt because you do not know what the future may hold. Many people think we will dig ourselves out of this hole we Americans are in, but I think there are rough times ahead. Paying off debt and getting into the position where you have enough food on hand or in storage will be just as good as gold. I think you made the right decision. Huge Blessings my friend! Meranda

    Reply
    1. Hey Meranda,

      Hope you both are doing well :) yah as for buying I wouldn’t be buying the lower end bottom of the barrel type of websites. I know $26k would have gotten me a pretty well established site making decent money.

      Good tip on the food – I’m not really prepared for that in a disaster situation.

      Reply
  15. Chris, I really like this post and definitely see where you are going with this.

    I don’t really agree that this was a “wrong” decision on your part. One of my main reasons for getting into IM is to get rid of that debt.

    The thing with this type of business is that you can probably make that money back relatively quickly, so you can always come up with more money to reinvest even if it takes a little longer.

    Reply
  16. Regarding debt, the idea I like best is that describe in “Rich Dad, Poor Dad”
    There are good debt and bad debt.
    If you have enough skill and knowledge to make more $ than interest you are paying, you better use your skill to the fullest extent.

    Moreover the value of $ is declining. $100 last year is worth more than $100 today, and the next year trend seems similar. It means savers lose and borrowers profit. (borrowers in this case is those borrow and invest, not borrow and spend)

    Have a look at following data. It is gold price in this last decade.

    Date Gold AM Closing Price
    29-Dec-00 $272.65
    31-Dec-01 $276.50
    31-Dec-02 $342.75
    31-Dec-03 $417.25
    30-Dec-04 $435.15
    30-Dec-05 $513.00
    29-Dec-06 $635.70
    31-Dec-07 $836.50
    31-Dec-08 $865.00
    31-Dec-09 $1,104.00
    31-Dec-10 $1,410
    today $1,526

    So what I am doing is borrow money and buy gold.
    Interest we pay for is far less than appreciation of gold.
    In your case, you are paying 8.9% and 7.9% for loans, let’s look at gold’s appreciation

    between 2008-2009 gold appreciate about 27%
    between 2009-2010 gold appreciate about 28%
    between 2010-now it already appreciate 8%

    So, why does gold price increase?
    Because Government around the world are printing more and more paper money.
    But they can’t print gold. Gold is a store of value since ancient time.

    So to pay back or to invest, it is personal choice.
    As for me I will stay in debt (not to spend) but to invest.

    For better understanding, I recommend two books
    1) rich dad, poor dad
    2) conspiracy of the rich

    Good luck all,
    Ye

    Reply
    1. Hey Ye,

      I still don’t know what I think about gold as an investment now. I think it’s almost too high and would be due for a correction. Besides, in the event of a financial collapse I bet the new currency would be food, weapons and ammunition before people cared about gold or silver.

      I did read that Rich Dad, Poor Dad book way back in high school though and it was valuable.

      But for me I don’t like to invest in anything I don’t have control over. With websites I know what I’m getting into. With gold it’d be up to the market to decide where it went.

      Reply
    2. Actually, what’s important with devaluation is that if you owe $300/mo. for 10 years, at the beginning it’s a lot of money, at the end, it’s more or less half (since inflation does a x2 every 10 years, although since 2008 that’s even worse!)

      So… assuming that your income stays “steady” as in at the same level of purchase power, meaning that you can always buy about the same weight of gold each month, then your loans get cheaper and cheaper.

      This is called leverage and businesses use that all the time (it also helps them have more cash that is not taxable!) Rich Dad, Poor Dad also talks about that because in real estate you do that a lot: you buy a house worth $200k for a mere $20k and when you sell it for $400k 10 years later, your $20k investment looks pitiful.

      This being said, personally, I prefer to be debt free. I don’t care much about my business though. 8-) Could be -$1M and I’d be fine…

      Reply
  17. Yes, you made the mistake of the average man. A lot can be said for the “I’m Debt Free” feeling. However, smart people are always in debt. Why? Student loans and mortgages PAY you money!

    After graduation, you can take interest from your student loans off of your income tax (you can do so for up to 10 years). Also, I first hand reduced my student loan to around 4-5% interest. Putting the money you would normally pay off the loan into a 3% yield means that you are only paying 1-2% which is below inflation. Couple that with getting 20-30% of that money back on your income tax and you can see that it pays to not pay off your student loans.

    Mortgages are pretty much the same as long as you have 20% of your house paid for. The interest comes off of your taxes. Furthermore if you have a home office, you can deduct a portion of your office from your mortgage (based on square footage so make your office the biggest room).

    So if you think you could have made more than 3% on that money, you definitely made the wrong choice. But!!!! (and this is a big BUT) Doesn’t it feel SOOOO good to be debt free?

    Reply
    1. Hey Jay,

      I’ll have to talk to my accountant about paying off student debt to see if we can get any tax breaks there (not sure)

      In either case, thanks for the input and I’m already 99% certain I won’t be paying down any more debt this year as I need to focus on investing in my business more.

      Chris

      Reply
      1. In the end it wasn’t a $26,000 mistake. Probably more like 10 or 15 when all is said and done. ;)

        btw… $150 more to go on my student loan. :)

        Reply
  18. Hey Chris, I fight this one a lot myself. We did the Dave Ramsey thing and paid off six figures of debt, and it’s a great feeling.

    However, I know that growing my business takes investment, so I’m allowing my business to take on some debt, as I feel pretty confident in the returns and I wouldn’t be able to grow it otherwise.

    You can run the numbers all day, but being debt free is a great feeling! I wouldn’t classify what you did as a mistake.

    Reply
    1. Hey Devin thanks for the input and I do agree it feels better having a little less debt that I need to deal with that’s for sure :D

      Reply
  19. Interesting post. I think if you could’ve handled the monthly payments on the student loans, the reinvesting into the business would have been the better idea.

    Or a possible split, pay down some and use the other to invest.

    Reply
  20. Chris,

    I’m a huge fan of no debt at all. My wife and I recently payed off both our cars, have no credit card debt and are only left with a mortgage. Talk about freeing up cash! Just think about how you can invest the $300 a month you saved and you’ll get your 26k back really quick and then some. Plus you’ll have the added bonus of not having to every worry about paying off the school loans again. That’s a win win in my book.

    Reply
  21. I personally would have done same thing as you – pay off debt.. While financial calculation might make it looks like other options more valuable – reality is – being debt free gives you sense of personal accomplishement and you can’t buy this!

    Reply
  22. I think you made the right decision. Anyhow, you have to pay that loan and you did it at one short. You should feel happy that you did it at once. :-) Now you can concentrate more on your business.

    Reply
  23. Thanks for sharing this, Chris. It’s tempting to think there’s a “right” way to make money (or avoid losing money) on the internet, but you’ve very elegantly pointed out that sometimes the received wisdom isn’t the best.

    The important thing is to do what feels right at the time – based on all the information we have. From that perspective, you probably *did* do the right thing, although with hindsight you can see there may have been a better way.

    But hey – all learning is good, right? ;0)

    Reply
  24. I think you’ve got a bit of “buyers remorse” going. I had the same thing happen to me. I paid off a very similar amount. I save up with my first job out of college to pay off my debt as fast as possible. And I did. It felt AWFUL losing that much money with one click of a button, but the further I go in time away from that click the better it feels. You are not only gaining freedom from debt but peace of mind that you don’t owe anyone anything (especially the government).

    Reply
  25. It’s all about personal preference. I’d never pay back a larger loan at once instead invest into business that will generate passive income.
    However if you or your wife sleep better at night knowing that some of the debt is paid back, then I think it was worth it. You have and will make a lot more money than $25k, don’t worry about this one transaction too much. Cheers

    Reply
  26. Yeah good lesson, always count if you can earn more then they want for debt!

    Reply
  27. First time visitor. I found the website via iTunes Podcasts on business. Love it so far and hope it doesn’t pod-fade.

    I’m hoping to go back into business for myself in the next two years. I’ll start part time while keeping the Corporate-America-makes-me-die-a-little-on the-inside-each-day job until I can transition full time. I’ve been successfully self employed before in the IT field. I’m running in the opposite direction this time. I can say that having debt can lead to making bad business choices because you owe money that MUST BE PAID. My ex and I couldn’t tough out the rough times because of previous debt and ended up selling the business for a steal.

    This time I will go into it debt free except for mortgage. Trying something online will be different than the brick-n-mortar business I help to build before but I think no debt and cash on hand to invest is best.

    Reply
    1. Hey Lauren,

      Good feedback and insight and that’s awesome to hear you found the site via the iTunes podcast – my marketing worked! :D lol jk, but that’s great.

      Chris

      Reply
  28. Congrats on being in the position to be able to pay down $26k in debt. Personally, I don’t think you can ever call that an outright ‘mistake’ — though perhaps a balance of paying down some debt, while reinvesting some of the money into your business would have been the best path — I struggle with trying to find the appropriate balance.

    Reply
    1. Hey Aaron, yah I still have plenty of money left in the bank but for example there was a website I was interested in buying earlier this year and it would have been about $60k and I was short on the funds to buy that site and I would have needed to come up with some extra money in some way to buy it because I decided $300 ish a month less in student loans was ideal (fail on my part)

      Reply
  29. Chris,

    Originally read some of your comments and insights you provided on another blog: http://flippingawesome.com/how-to-steal-a-website-a-true-story-part-2

    I’m glad you realized your $26,000 “mistake” from a business and investing standpoint.

    Don’t you hate when you realize it AFTER the fact ;)

    You seem like a smart guy, and you are right.

    Would be very easy for you to out-perform the monthly payment on the debt, especially doing it buying and selling websites or even even developing $300+ or more in affiliate income from a particular website.

    Although I’m sure your wife is happy and appreciative you paid off the student loans.

    Don’t let it eat away at you.

    You generated the income to be able to pay off that chunk of debt all at once, you can do it again!

    Marty
    DomainNameStaffing.com

    P.S. Is your wife actually using her Masters Degree in the real world?

    Meaning, is she earning a “return on investment” in the same profession she spent all the years, time, money and effort going to college studying for?

    Reply
    1. Hey Marty,

      Glad you found my blog via a comment :D the internet is such a small place lol. Yes my wife is using her Masters Degree in her job right now (Occupational Therapy) and it’s a very good recession proof job. I pretty much have told her that all I want her to do is pay off her student loans and then she can stop working if she wants to as my goal is to continue building my online income up so that we don’t really need hers.

      Chris

      Reply
  30. Great post. In my opinion, it depends. Paying off a debt right away may entail losing investment opportunities in the meantime, but in return it frees you of having to take care of any future financial obligations. Since nothing is certain (but death, and taxes) this should be considered a good thing. However, the ROI on the current investment is, again, a huge factor in making a decision. I’d say if you get your investment back in less than a year, go for it. Anything more than that, and it’s a gamble. just my two cents.

    Reply
  31. Hello Chris,

    ‘What I think….?’

    First of all there seem to be two sides to it and both,
    do seem to have their own logic to it…,

    An other thing that your post made me think of is about what you wrote about the Hypothetical idea for buying a website that Hypothetically would have a certain kind of Hypothetical monthly earnings.

    That idea reminds me of something I once read about Pop Star David Bowie, that he used his Reputation for being known as somebody with Potential for possible hit record successes to attract money for financing the recording of a new album, by promissing people a percentage in case of possible future profits. That way like ‘Making Money Out of Thin Air’ based on Hypothetical Future Profits.

    Also in the Movie Business some Movies are being made based on Possible Future Profits. In a recent post on my – Home Business Lifestyle Blog - I also wrote about it.

    All the Best,
    To your Happy – Home Business – Inspiration,
    HP

    Reply
  32. I think it’s interesting that you essentially had “buyer’s remorse” after paying off the debt. Most people have this struggle before paying off the loan, but afterwords feel like they made the right decision when they feel a physiological “weight” lifted off their shoulders.

    Like others have said, the right answer is different for everyone. Personally, I’m a debt free kind of guy. I don’t want to be obligated to make payments on anything, just in case I ever wanted to pick up and explore new opportunities.

    Reply
    1. I know now that paying off that chunk of debt was a terrible mistake and if I could take it back I would. I’d rather have $26k to invest in my business and now I can’t get that money back unless I want to take a higher interest loan out on it…

      Reply
  33. Debt vs. investment is a tough decision. I always fall back to what will make you sleep better at night the knowledge you have less debt or the knowledge that you have the cash to make and investment if the opportuinity come around.

    Reply
    1. I prefer cash on hand these days…

      Reply
  34. Really valid input. I currently have a student loan and I am in the same position. I like how you look at the rate of return you’re getting, because those are the investments that can really put you ahead. Great post! Keep them coming :)

    Reply
  35. Warren Buffett used to say something similar about buying an automobile.

    He reckoned that the automobile cost him more than $100,000 because by not investing the cash in an appreciating asset, in the long run his decision would prove to be mega-expensive

    Reply
    1. Yah, that’s why we only own one car and why I plan to not bother upgrading or buying another one anytime soon even though we can easily afford it.

      Reply
  36. Chris, there sure are a lot of different opinions on whether or not you made the right move, paying off the student loan.

    But only Eugene (slightly) touched on the real biggie – “owing money to the government”! Uncle SAM was your business partner in this student loan relationship, and that’s a partner you don’t want to owe money to. The government’s powers of collection and intrusion into your life are “unprecedented”.

    It’s really not all about “opportunity cost”. You did the right thing by getting “that” monkey off your back.

    I made sure to pay off my student loan and that’s why I’m no longer “sleepless in Olympia”!

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    1. Yah, I just dropped another $6k to pay off two smaller student loans from the under grad years that my wife had so now I’m just trying to balance business investment with loan repayment pretty much :D

      Reply
  37. I really love this blog. I love how open you are with all the information that you write about.

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  38. to me these mistakes adumbrated here are not considered too costly, for instance the mistakes buying a site for 25k usd and doing 1-2k monthly with it. being an investment, it will take time to grow.

    Well I dont know the perspective you are seeing this from. Maybe its because you have got big dreams and big big plans to have a secured viable financial future.

    I have really gained from all of these your 2011 mistakes. Thumb up

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  39. I know this post is quite old (since 2011), but I like to make a point that buying websites could be either profitable or unprofitable, paying debts on the other hand is surely lower down your total debt

    What if you’re buying a website, which is not worth while still paying for your debt?

    I’m not contradicting or anything, just a thought,

    Tony

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    1. Very true. Good points. We just paid off the last of my wife’s student loans a little while back which felt nice. Now all we have left is our modest mortgage and I’ll probably pay that off this year as well.

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  40. “I believe I can always make more than a 8.9% return when I’m buying websites or other web based assets”

    There is very little diversification there compared to a mutual fund. Putting all your eggs in one basket is bad enough on it’s own, but when debt is added to the picture and you thus have MORE THAN ALL YOUR EGGS in that one basket…?!?!?!?!

    Reply

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