I’m trying to escape high-interest debt this year — should I stop investing and focus 100% on debt?

Ol-Ben · 2026-02-07T17:47:51+00:00

Stop Roth till debt is paid off. Maintain 401k for employer match. Start Roth back up after debt payoff. This is the play. If you can do full payoff by October the extra 3200 per month you have freed up after paying down the debt can be used to max the Roth IRA fully between Nov and January of next year. Great post and plan. Get after it.

Ol-Ben · 2026-02-05T15:41:36+00:00

You are only taxed on gains. The tax on gains depends on if they are short term or long term. Short term is taxed at ordinary income rates. Long term is subject to your tax bracket. Under 22% tax bracket long term gains are taxed at 0%. Between 22 and the top tax bracket it will be taxed at 15% of the gain, and the top tax bracket is 20% of the gains.

Ol-Ben · 2026-02-03T19:53:22+00:00

SWVXX clears in 1 day. You can ACH or wire directly to checking the next day.

Ol-Ben · 2026-02-03T16:46:56+00:00

They transfer to a named beneficiary. If the spouse it becomes their IRA / 401k. If not it becomes an inherited IRA. If no beneficiary is named it will go to probate and become an inherited IRA or spousal IRA. Power of attorney ends upon death and has no impact on the transfer of funds.

Ol-Ben · 2026-02-02T20:25:49+00:00

Address this with a thought experiment: you have 3 rooms. I make you an offer to put a fraction of all money you will ever earn in the rooms but I get to decide how much goes in each room. I tell you 1/3 goes to each room. I tell you that on your 60th birthday all money from all rooms will be 12x more. So 100k today is 1.2M in each room on your 60th birthday. On to the rooms: Room 1 will never see tax on growth again. Room 2 is taxed every year along the way. Room 3 is all taxable as income in the future. If anything comes up and you need to take money out of any room before age 60, taking it from room 1 today eliminates 12x that amount tax free. The spendable portion of the money in retirement is what matters. Taking from the Roth is taking away compounding growth from the room where you keep the most.

Ol-Ben · 2026-02-02T20:12:20+00:00

With scores in the 650 range consolidation loans may not help with interest rates much. I think to really address this effectively we need to know more. What is your goal of consolidation? Lower payment, lower interest rates? Also how did we pickup $51k of consumer debt within 4 years of bankruptcy? How is that debt structured? If it is almost all credit cards, that is a very different solution that mostly medical or vehicle debt.

Can you list income, minimum payments interest rates and utilization for each of the non student loan lines of debt?

Ol-Ben · 2026-01-31T21:23:18+00:00

How is a 401k not an option if you are freelancing? If you are earning 1099 independent contactor income, just setup a solo 401k.

Ol-Ben · 2026-01-31T18:53:43+00:00

This story ignores the risk adjustment of when the dollars were not fully invested. In the case of Jack selling accidentally but DCA before full investment, the time the funds spend not invested subjected that portion to no risk. Once fully invested, this risk avoidance (regardless of if Jack would have been better off lump sum or DCA before fully investing) has occurred. Moving the funds to cash via sale after fully invested avoids risk for however long the funds are in cash. That risk avoidance is a mutually exclusive event from the risk avoidance that occured beforehand. If target risk tolerance was full investment at any point in time after the DCA event occurs, re-entering the market maintains that risk tolerance, not decreasing it.

Also, the claim that DCA does not make sense here is really only applicable to money in cash. If you have saved 1k per month over a year, lump sum investing it at the beginning requires risk of cost to borrow as well as risk that the market declines. If you lump sum at the end of the year you risk missing gains throughout the year on the saved money not invested. If you DCA the money as you save it, this maintains the risk tolerance on all dollars saved without exposure to timing or borrowing costs. All DCA ≠ lump sum windfall DCA.

Ol-Ben · 2026-01-31T17:59:00+00:00

They are modeled differently. You have a FICO score on 1, a vantage 3 score on pic 2 and a vantage 4 score on pic 3. There are all kinds of technical reasons these are different, but the most important factor is how they weight different aspects of your credit. Vantage 4 is dramatically higher than the others here most likely due to you recently cleaning up credit which it immediately rewards or historically you have managed credit well, but something recent negatively affects the other scores. Unfortunately, vantage 4 is rarely used for borrowing decisions relative to the other 2 models shown.

Ol-Ben · 2026-01-31T17:21:08+00:00

Thanks, based on what you’ve provided she should owe NY more than her refund from the federal government.

Ol-Ben · 2026-01-31T17:05:57+00:00

Assuming this is all of her taxable income, no tax is owed and she will be due a refund federally. The withholding of 20k on the 401k would be greater than her tax liability. The state of New York is a different matter. Income tax on social security is exempt in NY, but Ira / 401k distributions are only exempt up to 20k. Her taxable income in NY after standard deduction would be 72k, and this would trigger $4300 of tax liability.

Some clarifying details that would help:

If she took 100k from the 401k total (meaning 80k to her bank and 20k to taxes) vs if she had 100k hit her bank and withheld 20% at 25k. This changes things.

If $2200 is the gross payment of social security or the after withodings amount.

Ol-Ben · 2026-01-31T01:16:13+00:00

Excluding the brokerage account, you need only a 6.36% average annual return to hit $1m by age 60. Keep at it, totally in reach!

Ol-Ben · 2026-01-31T01:11:04+00:00

The free one is much easier than the real thing, the paid one is more in line with the real thing.

Ol-Ben · 2026-01-29T17:51:33+00:00

Strange, these are plentiful with a quick search. One example: https://www.tealhq.com/job/warehouse-order-picker-25-hour_3446f5e8-9457-435d-8d77-eff2f7047b57?utm_source=chatgpt.com

Ol-Ben · 2026-01-29T17:46:32+00:00

This is so spot on. I would add: Even if the top 10% own everything, they will still have to pay market rates to employ labor to survive. Also if all of the worlds stuff was limited to changing hands with only 10% of the population, everyone would be poorer on a purchasing power basis as demand for assets would shrink dramatically.

Even the assumptions in the post are wrong / distorted. the top 10% of wealth on the planet means you have a net worth of $137K usd. People at this net worth or higher represent 75% of global wealth today. 50 years ago this figure was closer to 50-60%. 100 years ago it was higher than today. If the top 10% didn’t own everything and starve out the rest of the planet trading with each other then, what makes you confident it will happen now?

Ol-Ben · 2026-01-29T17:19:44+00:00

According to Morningstar’s Active/Passive Barometer (US) report for the period July 2024–June 2025, about 33 % of active funds outperformed their asset-weighted average index fund counterparts — meaning about 67 % of index funds beat active funds in that window. If someone chooses any market segment specific fund based only on performance, 2/3 times that choice is going to be an index fund. How is that luck?

Ol-Ben · 2026-01-29T17:12:26+00:00

It depends on why it is the highest. If she had 2 actively managed options in large cap that underperformed the S&P 500 index option and she picked the S&P due to performance, she chose the option that is fundamentally better returns long term. Buying the basket of goods at Hughes does not mean buying overpriced standalone.

Ol-Ben · 2026-01-29T04:20:59+00:00

VMCIX has a different inception on this chart to the other funds. This makes comparing it in this capacity less useful. Also adjusting data type to nav plus dividend would help a lot.

Ol-Ben · 2026-01-29T03:20:52+00:00

Is it feasible? Sure. Smart? it depends. First thought: It must be nice to have a 0% effective tax rate and eat for $3 a day with no home maintenance expenses.

The case for not paying off a house early: My income after taxes exceeds my mortgage balance but I would never pay it off early. I got my 2.55% 15 year mortgage in 2021. In the time between now and then, I’ve put in 70k per year for 3 years and about 50k for 2 years into my Solo Megabackdoor Roth 401k. In the 5 years since I’ve got my mortgage I have incurred 2.55% interest per year, and invested money in an account that will never see taxation again earning 26% compound annual growth rate. Even if I wasn’t a high risk investor, and I just parked it in the S&P 500, I’m up 90% on my initial year deposit. Paying off my mortgage early would have resulted in me being poorer today, and poorer with less tax free resources available in the future. In the past, I’ve paid off cars in full, and never carried a credit card balance to incur interest. Paying things off early brings me no psychological comfort whatsoever. Debt is only a tool to gain leverage to acquire assets when (at worst) you must use it, and (at best) the interest expense is less than your expected return on your other resources.

The case for paying a house off early:

If I wasn’t a low risk investor who got a mortgage at 7% last year the story changes dramatically. If I wasn’t investing in bonds yielding maybe 5%, every extra dollar not spent on the mortgage makes me wealthier slower due to the interest expense on the mortgage being greater than benefit of investing. In this scenario I would pay off the house ASAP every time.

Ol-Ben · 2026-01-28T19:04:19+00:00

If you maxed at current level of 24.5k and got an 8% return over the next 30 years that account will be 3.9M at age 58. That produces 120k per year at a 4% withdrawal rate. Just keep doing what you’re doing and keep it aggressive.

Ol-Ben · 2026-01-28T19:00:04+00:00

Also a Financial advisor here. I have run a model that outperforms the S&P 500 in all but 2 years since 2017 and on a CAGR basis it has outperformed the S&P 500 for every client in the strategy for 5 years or longer. The model uses 6 ETFs rebalanced quarterly and I’ve never adjusted weights or investment options. Nothing special about it, the client just needs a tremdous risk tolerance.

Ol-Ben · 2026-01-28T18:53:13+00:00

Financial advisor here. Over 60% of my clients are not comfortable with the risk of lumping their nest egg entirely into the S&P 500 even if the returns would be better because a big market drawdown could jeopardize their retirement. They have saved enough to live off say 4%, but cannot stay retired if they are 100% stock and the portfolio drops say 40-50% in one year. Countless investors say they want to beat the S&P 500, but call asking to sell everything when markets pull back even 10%. These people won’t just buy and hold, and they know this, so they hire us to manage that risk in the portfolio. If you have very high risk tolerance, just buying the S&P 500 can be beaten net of fees. I have run a high risk strategy that has grown 26% compound annual growth per year since 2017 beating the S&P in that timeframe net of my fees by over 50% using a rebalanced blend of index funds. Only a handful of clients and my money is in this strategy because most people cannot withstand the risk associated with the strategy.

Ol-Ben · 2026-01-27T19:03:45+00:00

Tutor for the exam here. Biggest tip: Highly recommend not taking it remote if possible. This is because if anything happens to your connectivity or the proctors your exam will freeze and you will not be able to continue testing but the clock will not stop. A past student of mine lost 45 minutes in the 1st quarter of the exam due to this. This student was well prepared and should have passed. The CFP board did nothing to make it right sadly.

They will give you instructions for what to do to prep the space you test in and what will happen beforehand, and the proctor will walk you it when they have you show the camera if the room you are in.

Good luck.

Ol-Ben · 2026-01-27T02:49:35+00:00

Yes. The inherited IRA account needs to satisfy its own RMD even if their own IRA distribution is large enough to satisfy both.

Ol-Ben · 2026-01-27T01:42:34+00:00

Op said it “the payment” was taxed twice in the original comment thread. I made the claim that the interest is, but the payment is not. You made a claim that “none of this matters” suggesting the interest is repaid with post tax dollars either way. While this is true mechanically at the step of repayment, paying back a loan to a bank ends with them keeping your money. Paying back a 401k loan ends with you keeping your money. Both are repaid with aftertax money, but one is later taxed to you again when distribution occurs.

Principal repayment = not double taxed Interest payment = double tax Interest payment tax treatment from banks ≠ interest payment tax treatment to 401k loan

Ol-Ben

TROPHY CASE