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Creating Freedom Through Financial Independence


Podcast: Should You Pay Down Debt Or Invest?

May 4, 2021

In this episode…

Pat and I discuss different strategies for dealing with debt and mortgages when your goal is financial independence.

Should we focus on investing, or should we aim to be debt-free?  Which will help us become financially independent faster?

We explore the ins and outs, and share thoughts on the various options to help you decide what to do.


Listen to the show…

(you can download the mp3 file here)


Discussion points…

  • The worst form of debt  (02:31)
  • Our thoughts on credit cards  (06:05)
  • HECS/HELP debt  (08:51)
  • Mortgage debt and calculating the benefit  (13:28)
  • Should you pay down your home loan or invest?  (19:06)
  • Accessing home equity in retirement  (23:56)
  • How does debt affect our ability to become FI?  (28:31)
  • Mortgage strategies to optimise your cashflow  (30:57)
  • Margin loans and investment loans  (47:08)
  • Takeaways from this episode  (52:29)


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3 Replies to “Podcast: Should You Pay Down Debt Or Invest?”

  1. Another good one guys.

    My approach: Each fortnight put 50% towards buying LICs/ETFs and 50% into the mortgage offset. When a correction happens use most of that money in the offset to buy shares that have dropped in price.

    Best of both worlds. Money in the offset helps to sleep well at night too.

    1. Thanks John. That’s an interesting approach, and I can see how it’d be enjoyable in practice. Is there an upper limit to the amount of cash you would build up if there’s no correction? And what is your threshold for investing that cash… a 10% fall, 20% fall?

  2. Gday Dave. It is simple enough and works good enough for me.

    I just try to keep the same amount in cash in the offset as I have invested in the share market. As Peter Thornhill said (paraphrasing) keep a lot of dry powder and be ready to go when the big opportunities present themselves.

    In terms of a correction I would be going pretty much all in again if there was another 2020 level drop (30-40% or more). 10% or 20% correction I’d certainly be buying something.

    I use the free LIC/ETF reports on Firstlinks as a guide for the ‘usual’ price to NTA of the stocks. The reports are available at:

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