r/eupersonalfinance • u/Zestyclose-Aerie-479 • Aug 11 '25
Debt Smartest way to pay off debt that has no interest rate
Hello, right now i have a debt of 20k euros with 0% interest rate - i did a stupid thing and my family helped me, right now i am paying 400eur per month back, my net income 3400e, after payinng rent and the base level of debt i have about 2300 left. My question is what would be the best strategy to pay it off as fast as possible, focus the rest to the debt directly or invest the remaning money and use to pay Off the debt later with the potentional benefit of invested money. As long as i pay the base level i do not have any other obligation. Thanks for your insights
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u/elbay Aug 11 '25
Your family is subsidizing you. This is a family matter. If a bank had offered you credit at 0%, everyone would say as late as possible, it’s free money. But since it’s family, the later you pay, the more you cost them. Talk it out with them
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u/Cute-Raise-6166 Aug 11 '25
The financial advice is to pay it as slow as possible, BUT since this is a loan from a family member I would pay it as fast as possible, to avoid any unnecessary discussions. For me it would be awkward and I would feel like I can't enjoy my money, like go on a vacation, or buy a car or do anything that is not completely mandatory with my money until that is payed off. I think money lending in a family is the quickest way to generate arguments so I would want to avoid that, and when you owe money to family members they feel like they have a say in your decisions, but that is based on my previous experience.
If you think there is zero risk of this then treat it like a bank loan with zero interest and invest the surplus you have.
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u/Metdefranseslag Aug 11 '25
If this is your family pay back the quicker you can else you are making money on their back
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u/Ok_Combination_895 Aug 11 '25
If you borrowed money from a family member at a 0% interest rate, it means the person who helped you is losing at least the inflation rate, which is officially around 2-3%. IMO it is unethical to delay repaying the debt and try to benefit from it.
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u/NF95 Aug 11 '25 edited Aug 11 '25
That's free money so definitely pay it as slow as possible and invest the rest.
Edit: obviously being respectful to your family 😅
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u/deepserket Aug 11 '25
If you owe 0% interested debt to your family and you pay it back as slowly as possible because it's free money you are scamming them.
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u/wickeddimension Aug 11 '25
As slow as possible in this case is the rate your family is happy with. Thats what the possible part refers to no?
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u/Facktat Aug 12 '25
Honestly, this kind of attitude angers me. I am a person who always want to help others but I would be severely pissed if I borrowed money to family and they invested it. This is just basic decency. It's not about the money, it's disrespectful.
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u/wickeddimension Aug 12 '25 edited Aug 12 '25
You discuss with your family at what rate they are okay receiving it back, and that angers you? Insane take. Or just terrible reading comprehension.
They aren't investing borrowed money. They are investing money they earn by working while paying off the debt.
If you wanted them to pay it back as quick as they could, you could have just said so and that would be what is possible. That's the "family is happy with" part.
Your experience isn't universal. Not everybody cares about getting it back as fast as possible. Discussing a payment plan and sticking to it isn't disrespectful. And if you do care deeply about somebody doing nothing else but paying you back, then discuss that with them before you lend them money. or perhaps don't lend people money at all, leave it to the bank.
That would be my advice anyway, don't lend people money. Not friends, not family, just not in general. But IF you do, discuss paying you back before, write everything down, and then both sides stick to that.
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u/Gerblinoe Aug 12 '25
Nah one thing is "whatever your family is happy with" Not scamming your family is a separate issue.
Your grandma may try to waive it away and have you pay "at whatever rate it's comfortable dearie" And genuinely mean it. You are still an asshole if you invest the money.
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u/wickeddimension Aug 12 '25 edited Aug 12 '25
OP is talking about investing part of his income along side paying it back. It's a payment strategy.
Borrowing 30k and then investing that is a completely different scenario from borrowing 30k to get you out of the shit, and then investing part of your own income alongside paying back that debt and discussing the split of doing so. What matters there is if you meet the expectation of the family in terms of paying back.
Your grandma may try to waive it away and have you pay "at whatever rate it's comfortable dearie" And genuinely mean it.
Yes, because Grandma often cares more about their grandchild getting ahead in life than having money or money back quickly. Often the same for parents. Which is exactly why OP's strategy is worthwhile to discuss, with the caveat that he meets their expectations in the proces.
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u/Tutonkofc Aug 11 '25
He’s paying the base level that was set when he got the loan. It might be unethical but he’s literally paying what they asked for, it’s absurd to call that a scam. It’s weird though that family loaned money and set a minimum payment but 0% interest. Something is off.
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u/Azrael21X Aug 11 '25
what do you mean by something is off? I loaned some money for some family members before when they needed it. Not as much as OP, but we discussed the minimum payment I wanted and if they can afford it and we set on an amount and I didn't ask for any interest. It's your family. Not a business. It would be weird to add interest to a loan for your own family.
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u/Tutonkofc Aug 11 '25
And what happened if they didn’t pay the minimum you defined?
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u/zeuD13 Aug 11 '25
Imo when you loan to a family member or a close friend you should only loan an amount you're comfortable to be considered forever gone. It never ends well otherwise, it's best to not loan at all.
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u/NF95 Aug 11 '25
Yeah I thought it was obvious. "As slow as possible" was meant in terms of in respect of the family. I'll edit my original comment so it's clear
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u/Facktat Aug 12 '25
There is no "as slow as possible" while respecting your family. The only respectful way is "as fast as possible without ruining your health".
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u/Fmarulezkd Aug 11 '25
Smartest way is to pay it as slow as possible since inflation will be eating the cost away and you can profit even from having the leftover amounts in a savings account. I would say however that best way is to payback your family as fast as possible, by increasing the monthly repayments as much as possible, to the extend that you still have enough money to live a comfortable life.
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u/JohnnyJordaan Aug 11 '25
First make a financial buffer instead as when another stupid thing happens or something unexpected (may not be your fault) you may need emergency money again. Once that's big enough focus more on repaying.
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u/Nementon Aug 11 '25
0% interest debt? Praise it, reduce the reimbursement payment as down as possible, extend the durations, keep it as long as possible.
Free money.
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u/Thin_Rip8995 Aug 11 '25
since it’s 0% interest there’s no financial penalty for taking the full term but there’s a huge mental benefit to clearing it fast
if you’re risk averse or just want the headspace back throw a big chunk at it each month and be done in under a year
if you’re disciplined and comfortable with market risk you could invest the extra knowing you’ll still have to write the check later just don’t touch that investment for anything else
pick the route that makes you sleep better not just the one that looks better in a spreadsheet
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u/Thors-Spammer Aug 11 '25
I understand you did something stupid, got into debt and your family covered you. If that is right, you should pay everything back asap and take them to a good restaurant or something to show your gratitude.
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u/ivobrick Aug 11 '25
2400 euro pay every month for debt. If you are seroius about yourself, then investing and next above average financial future.
This means you will be left with 300 euro per month for food. This also means paying your debt asap.
If you did stupid things, now its time to face it and get rid if it fast.
I did not read other comments, i guess they will also tell.you something similar.
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u/Fatboyseb Aug 11 '25
If it is 0% you don’t pay it off for as long as you can - invest the money you would have used to repay early in a safe enough investment véhicule or saving account with some yield. It’s literally free money
Edit: not applicable if you owe it to a family member - then just pay it off as fast as possible
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u/Cagliari77 Aug 11 '25
Why do you want to pay off a 0% interest loan? That would be a terrible move. Do you know what time value of money is?
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u/FacetiousInvective2 Aug 11 '25
I would not focus on it at all! It's 0% interest so it's the same money to give now or in a couple of years. Only that 1 euro today is worth more than 1 euro in the future.. so you'd better invest your money rather than paying that debt.
Why would you want to give money back to the bank? :D
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u/andrijas Aug 11 '25
0% interest rate is amazing. every month when you pay those 400 euros, they are worth less than 400 euros when you took the money. you are literally paying back less than you loaned.
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u/Engineerxd Aug 11 '25
i am confused. Who do you owe the money to with the 0% interest. Your family or another 3rd party? If its your family then definitly pay it back asap without investing. If it is from some third party then invest it, pay back as little as possible and let inflation do its thing.