Deduct The Interest Or Invest

Kerry is uneasy about what her financial advisor is telling her to do about an interest-only mortgage.

QUESTION: Kerry has an interest-only loan on her house that she pays an extra $325 on. Her financial advisor says she should invest that $325 instead. She is confused and wonders what Dave thinks. He thinks Kerry isn’t confused, but the advisor is.

ANSWER: You’re not confused, but your advisor is. You have common sense and he’s trying to earn a commission. He doesn’t make money if you pay this off, so he’s not in line with your value system. Therefore, you need a new advisor. If you had a paid-for house and this guy told you to borrow and invest, would you do it? No, you wouldn’t. This is the same thing, but you looked at it differently because your heart measured the risk factor.

You don’t need a guy who is going to lead you like that. I’m not going to spend my time arguing with people who are supposed to be advising me. Get rid of this guy and find someone who has the heart of a teacher. Get $1,000 in the bank for a baby emergency fund, then get out of debt with the debt snowball. After you have a full emergency fund in place, then start investing.

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