I personally prefer a balanced approach of debt reduction/investment. However, if I had to choose one or the other it would be debt reduction.

Getting rid of debt is a known quantity and guaranteed to leave in an improved financial position. Money not spent on interest is as good a money earned on investment. The real issue is where do you think it will balance out. Paying off debt is likely to just get harder in financially bad times.

Making an investment is more like gambling. You hope your investment will earn money and pay off, but you don't really know for sure. (Some are much more safe than others, but the really safe ones pay less than the interest you'd save from paying off debt.)

It is unlikely your $2k in CC debt will disappear and the interest will continue to accumulate. Silver might go up... then again, it might not. The link below is to the price of silver over the last year. The chart period can be changed to look at the price over different time periods:

http://www.infomine.com/investment/metalschart.asp?c=Silver&r=1y

-Per.

 

Since 1993 silver has "returned" around 5% per year, it was LESS than that a month ago but I believe it's been up in price a good bit lately.

 

I'd do 1k of each.

You have some coverage no matter what happens. I'd be very careful about any 'all your eggs in one basket' approach in these times.

 

Your line of credit, your money, and your 401k are all preps just as much as your rice and beans. They are preps in case the world doesn't end on your expected schedule.

Sheeple are what they are because they have fixed in their minds that the future will play out in a certain way. If you as a survivalist focus too much on your various end-of-the-world scenarios to the exclusion of preparing for the world to continue, you aren't any better than they are.

If you have extra money that you can afford to lose, there's nothing wrong with investing in precious metals. The price of silver has risen and tanked dramatically over the last few decades. If you catch it at the right time, you can make a killing but at the wrong time lose your shirt. Just like other investments.

Borrowing money to make investments dramatically increases the risk associated with that investment: you're guaranteed to have to pay interest on top of the risk that the investment itself might lose money. I had people who asked me the same question but about investing in the stock market. They probably would have ended up ahead of the game by borrowing, investing, then liquidating enough of the investment to pay off the loan at just about any point over the last couple of decades. But it would have increased their risk quite a bit.

I personally think inflation is going to continue and that precious metals investing can be a hedge against that as part of an investment portfolio.

I prefer to use my investment money to prepare for the world not ending since its better designed for that (compound interest, time-value of money, and related concepts) and use my lifestyle and shopping skills to lower my expenses so that I have money for end of the world prepping.

Even if the world does end, precious metals won't have value in all circumstances. It won't stop a riot, stop a home invasion, substitute for food when there is none, substitute for medicine, etc.

There's a heck of a lot more precious metal in the US mined and out in circulation now than in any other civilization that has fallen. There's all kinds of wedding rings and other jewelry, silver tea trays, etc. When people start to get scarce and things start to settle down enough for trade to begin, will your silver be worth anything if people can walk into a few uninhabited houses and find silverware, diamonds, gold, and jewelry? Heck, if people want precious metals that badly, they could go around grave robbing with no government to stop them.

I don't expect precious metals to be worthless but I'll not be surprised if they have a lot less value than what most people expect.

 

Wow what a question. So hard to answer because of IF. First it is better to get out of CC debt. In a stable environment, using your model, you would net a 9-21% immediate return on your money by reducing your CC debt. With silver today you are buying in at a very high point for that commodity. Traditionally one of the worse times to buy anything is at it's peak.

That doesn't mean it's peaking but it does highlight to you how far it can fall in price. Now all of that is in a stable economy where the dollar has value. Where are services and goods can be translated into a coin for barter.
But what if the SHTF in a big way? You are genius because you were able to avoid CC debit. How long you plan on patting yourself on the back before you start picking up the pieces?

That silver you purchased, today at $12.77, what is it worth to then? Or another way to put it; how many rounds of ammo would you give me if I gave you x onces of silver? How much of your food supply would you be willing to part with for a pound of silver?

My point, like a previous poster mentioned is you should be prepared. What if the SHTF OR not? The prudent man rule says get rid of CC debt it is the surest return on your money.

Oh by the way silver has been trading in a $3-$6 range for the past ten years or so. It was only in 2004 that it started to climb. Also the charts has it peaking in April 2008. It appears to be going down as we speak. It would seem likely that silver will correct somewhere around $8, at a guess.
Assuming that is true and the US keeps chugging along you would now find yourself with CC debt and your portfolio would be down by almost 40%. But if the SHTF you would have some silver and the satisfaction of screwing the people that lent you money.

I do not know your situation and I only give you a humble opinion. Personally my goal is being debt free. Good luck

 

I would pay off my CC's first. "Out of debt and out of danger".

 

I second the CC elimination. Guaranteed interest lost on the card will be hard to outweigh, at best. If anything, I'd buy things you were short on while continuing to pay down the debt. Not at the minimum, but I might not go overboard either. Some pretty sweet settlements for one time cash payment have been going down lately. The banks aren't advertising this, obviously. It won't do you much good to have your debt totally paid or almost paid if you are not making grounds on your supplies. It's not as if you'd get another line of credit to buy your loot with if the time comes you really need it.

 

I would buy PM's first...if you can find them.

 

As someone who works with stocks almost daily, I suggest doing it 50-50. Especially in this climate. Also if you pay your debt off quickly, you can save money in the long run if your investments don't pan out.

 

I'd suggest paying off the CC's and never carrying a monthly balance on them. It's a good idea to have liquid assets (whether money or PM's), but as others indicated PM's are not guaranteed gains, whereas your debt is a guaranteed loss.

 

Debt reduction and elimination is definitely the best choice. Precious metal is only valuable to someone who wants it. Personally i own PM but as It has been rising I have been liquidating and an interesting thing is taking place the spread is getting less favorable for the seller and that because those who purchase it aren't as convinced of the value of PM as perhaps some survivalists might be.........
I wouldn't own it at all if it wasn't a good investment back around 2001 and it has done well I've made roughly 200% in 7 years better than the SP but not Stellar by any means and not better than debt reduction if your interest rate is 12%.

 

Ridding yourself of CC debt is a no-brainer, it's ALWAYS a good idea. It's the proverbial mill-stone around your neck.
Which way PM's will go is anybody's guess, though several thousand years of human history make a good case for them.
But....we KNOW all fiat currencies,including ours, will ultimately crumble. That ain't speculative ,wild-ass guessing,that's a demonstrable, historical fact. At some point,without question, the U.S dollar WILL fall by the waysaide, making way for whatever currency de jour is next, and it's still a fair bet that PM's will have at the very least SOME value.
"Some" value is preferable to "none", and that's just a "worst case" scenario.
In todays economy, I'm all for PM's. YMMV.

 

Well at least you gave us two good choices - paying off debt, and purchasing tangibles. Personally, I readily subscribe to the Dave Ramsey school of thought. He advocates a whole list of priorities, the first of which is the establishment of an emergency fund. Because we are living in unique times, I would recommend that your emergency fund be diversified between metals and a bit of cash (although like MIL-DOT I think it is unwise to keep your savings tied up in mostly cash).

Once you have a good healthy emergency fund, I would recommend eliminating debt. We are entering a time of many great unknowns. The more debt you carry, the more cause you give lenders, the gov, etc. to confiscate your possessions. I do not subscribe to the line of reasoning that extending yourself in debt as we enter a depression is a good idea. It just isn't.

If you are an unscrupulous opportunist, and you happen to also suffer from debt-lust, wait until it seems that we have reached the bottom (and we are far from it). Then you can debt-invest in all the assets dumped for pennies by all the down-and-outers. That's essentially what the elites did during the culmination of the Great Depression.

But again, I would recommend that you establish an emergency fund, then pay off debt, then start converting a large portion of your portfolio into tangibles.

____________________________________

"Civilize the mind, but make savage the body."

Survival360.net

 

(QUOTE) " I do not subscribe to the line of reasoning that extending yourself in debt as we enter a depression is a good idea. It just isn't."

I couldn't agree more. I can't understand how this concept keeps appearing on this and other related forums.

 

I hear you brother. If I hear one more person tell me that "dollars are going to be devalued so it is wise to borrow a million of them immediately", I am going to puke. Yes, the dollars is going to be halved over the next several months. But that still doesn't make it a good idea to over-extend in credit as we just begin our free fall into economic disaster. Is that survival or suicide?

People have this idea that when they buy on credit that they actually own something. They don't. And when they can't pay the bill, they lose the asset, often times along with all the payments they have made against that debt. Anyone want proof? O.K., how about the housing bubble. All the people who wanted to make quick money without bothering to do their homework ran out and bought multiple houses on credit. Probably didn't work out so well for most people.

__________________________________

"Civilize the mind, but make savage the body."

Survival360.net

 

People who have practiced preparedness for decades may remember the "Alpha Strategy" that promoted the purchase of massive amounts of supplies on credit during the inflationary 70's and early 80's. It proved to be a failure. During that time there were many who thought the dollar's value would freefall. gasoline would become unavailable, and the glaciers would rule the earth due to global cooling. None of that happened and those who ran debt up were SOL. A true survivalist is prepared for good and bad times. Debt, no matter how you justify it, is bad. Many loans can be called "due" immediately if the lender thinks that economic conditions are not in his favor.

 

I never read that book but heard a lot about it. It actually promoted doing all that on CREDIT? Wow!

I can say from personal experience that getting out of debt frees up SO much money for preps it's unbelievable. It also feels pretty good spending bucks on quality NVG's and not worrying about getting a CC bill the next month with it on there...

 

My .02 on th subject would be to split it in 3. Spend 700 or so on pay the card, 700 on silver, and another 700 on medium term preps. With the way the economy is going, that 700 you spend on extra food could have a good return in the near future. Let's say you already have a years worth of Long term preps. Spnding the money on more meat for canning, pastas, can veggies and fruits, and other common dry good could be used this summer or fall.

If things get real rough in the short term, you have extra preps to barter or use. If things become a real nasty recession/inflation/ or mild depression, that food will cost 25%-30% more, saving you money.

If things get worse and worse, the stores offer sales to promote activity. When that doesn't work well, they jack up prices because the store needs to and suppliers need to.