Level 3
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Investing

An alternate strategy to consider once a 6-12 months cash cushion is created is to pay down installment and credit card debt early.

 

For instance, if you prepay a loan with 12% interest, you have effectively earned a guaranteed 12% return. You have no such guarantee in the stock and bond markets.

 

As a bonus, becoming debt free can be a real stress reliever.

 

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