Michael Wagner Explains Why Investors May Not Want to Pay Off All Debt with Barron’s

When it comes to debt, the natural instinct is to pay it off as soon as you have the funds to do so. However, in our current low interest rate environment, this may not be the most fruitful path for all types of debt. To learn about which debt types may be advantageous to keep, even as interest rates rise, Barron’s recently spoke with Omnia Family Wealth Co-Founder and Chief Operating Officer Michael Wagner.

“Leverage is not a terrible thing at the moment,” says Wagner. However, not all debt is created equal. It is important to understand which types of debt to hold onto and which to pay off. For example, with interest rates typically around 18 to 20 percent, it might be a good idea to get rid of credit card debt. Meanwhile, debt with lower rates and secured credit such as mortgages, home equity lines of credit and credit lines on securities accounts may be better to keep. “It’s the whole idea of good debt and bad debt,” Wagner explains.

However, if holding onto lower-rate, secured credit is too much of an emotional toll, Wagner says that this is likely a sign to pay it off. “If it’s going to keep you up at night that you have this mortgage hanging over you, then pay it off,” he tells the publication. “You have to be very mindful of the emotional aspect of these decisions.”

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