Dear Debt Adviser: I own my home and have no mortgage or note. I have no debts except a student loan of about $11,000, and I can pay that off right now. I’ve always wanted to be debt-free, and I could write a check tomorrow and do that.

My problem is that the interest rate on the loan is only 3.5 percent. I make a lot more than that on the funds I have invested. Why should I take money that makes me a lot more than 3.5 percent and use it to pay off the loan? Isn’t that kind of silly? Everyone is always preaching that you need to be debt-free! I understand the principle; I’m just not sure I agree with its blanket application. What do you think? — Jeff

Dear Jeff: As long as you can make your monthly payment on the $11,000 student loan debt, I see no problem with keeping your money invested. As you said, the funds are earning more than the 3.5 percent interest that the loan is costing you.

If that debt continues to bother you, you can always write a check and be debt-free. If you do, though, make sure you still have enough savings for emergencies. I would encourage you to keep something else in mind: Positive information for closed accounts such as your mortgage and car loans will typically be removed from your credit report 10 years after the last date of activity. Positive open accounts such as credit card accounts will remain on your credit report indefinitely. I mention this because in our credit climate, you would be wise to be able to illustrate you can manage credit even if you don’t currently need any.

Things change, and at some point in your future you may want or need to use your credit. So keep an eye on your credit reports and know when your positive installment accounts may be removed. If you are in the market for new credit, you may want to apply for that credit before those old accounts are gone.

• Steve Bucci is the author of “Credit Management Kit for Dummies.” Email him at debtadviser(at) See more Debt Adviser columns at

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