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Everyday Cheapskate: Should I Invest in my Debt? And More Great Reader Questions

Mary Hunt on

Dear Mary: I recently inherited a certificate of deposit that came with a good interest rate. I left it alone until it matured, thinking I would renew it.

Rates are much lower now, and I'm wondering if I should use these funds to pay off the home equity loan we got when we did major work on our home. That would leave us debt-free, including our mortgage.

We are two or three years from retirement and have our one-year contingency fund in place. If I used the certificate of deposit to pay off the equity loan, I could take that payment amount and increase our retirement savings.

Does this sound reasonable? -- Kim

Dear Kim: That sounds very reasonable to me, and based on the information you've given, I would highly recommend that you do it.

Investing in your debt is a safe bet, and it's one I do not think you will ever regret having made. You will have a guaranteed return on that "investment" equal to the interest rate you are now paying on that home equity loan.

 

Provided you continue making those monthly payments to yourselves, you'll be in great shape to retire when the time comes.

Dear Mary: When my brother-in-law was a pastor, he was authorized to use the church credit card to purchase things for the church.

He has not been at that church for over a year, and the church has never paid the final bill of $7,000.

Because he was an authorized user on the account, he is worried that this is going against his credit report. What should he do? -- Cindy

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