A possible strategy for paying off student loans quickly?
October 19, 2010 by admin
Filed under Student loans
If I happen to be holding many thousands of another currency, such as Euro, when the dollar takes a plunge I will profit greatly as an American. Do banks have any failsafes to prevent customers from repaying debts when the dollar is unusually low?
For example, let’s say that 6 months from now the value of the dollar falls 25% below what it is today compared to the Euro. If I were to invest $20,000 (roughly equal to my current debt) in Euros today, could I in effect save 25% on my loans by repaying them during the value decline?
Sure, if the value of the dollar falls, and if you invest $20,000, and . . . if wishes were horses, beggars would ride!
What happens to your grand scheme if you take the $20,000 and invest it in Euros and the value of the dollar *increases*? You’ll have a loan payment due *and* you’ll have lost a lot of money on your investment!
Speculating on the value of foreign currency is no more than gambling, pure and simple. You might as well ask “What if I take my money to the casino and pay off my loan with my winnings?”