A dozen years out of undergrad, my student loans had steadily dwindled from $20k+ to a measly $4,748.38 as of tonight. I am quite Mustachian and I've had the means to pay them off at a stroke for many years now. But I had always rationalized keeping the loans around because of their extremely low interest rate - under 2.5%.
Reading MMM's latest post on cognitive bias, though, finally changed my thinking. I tried to do as the post suggested and imagine what I would say if someone came along offering to loan me $5,000 at a rock bottom interest rate. "Just think," that person might say. "You'll be able to invest this $5,000 in the stock market and earn a much better rate of return than the interest costs you."
MMM's post helped crystalize what I had dimly suspected in the back of my mind for some time: I was rationalizing a silly choice and there was no reason to pay the bank interest any longer.
