But when it comes to financial decisions, I just don't get that there is anything else to consider other than the likely financial outcome. I understand that people have different risk tolerance levels, but the FIRECALC runs I have done show that holding the debt provides (slightly) *less* risk, (slightly) *less* volatility, and (slightly) *higher* success rates.
So do you see why I am confused that people describe a path that may entail (slightly) *more* risk as "freeing"? It is cognitive dissonance for me.
For me, I think the word "likely" is the key phrase in your analysis above.
Everyone's circumstances are different, but here's one example:
Mid-thirties, still working toward FIRE, maxing out all tax deferred accounts, nice emergency fund stashed up, college savings for kids on target. Now the question is, for the extra savings/investing, how should it be allocated such that it helps bring me to FIRE as soon as possible?
Sure, doing some pure financial analysis might say that I should continue to invest this money in taxable accounts, at my calcuated asset allocation (let's hypothetically say 75% stocks). But that's based on "likely" outcomes, "average" returns, etc.
As we all know, things don't always follow the average or likely scenario. The last 10 years have taught me that. Who knows what the future may hold.
If I throw all of my taxable savings at my long term asset allocation, I may come out OK in the long run, but along the way I may have made little (or negative) gain after a decade of investing. There may be long periods of time where my taxable savings aren't doing anything to get me closer to FIRE, aren't growing, may even be shrinking, and all the while I'm still slaving away at the j*b to pay the monthly nut on that debt. And I need to keep that j*b to keep making those payments. I'm more locked in.
Alternatively, if I used some of all of those savings to pay down debt, I can reach a point where I no longer have that monthly nut to pay the debt. I may not have enough to FIRE, my FIRE stash will be less because I've invested less in taxable account. But I have more flexibility. I can switch to a lower paying job with less stress, or maybe part-time work, or maybe start my own business, all because I no longer have that monthly nut to pay in debt and interest. Sure, I may decide to stick with my job and accelerate the FIRE stash, but it gives me options and future flexibility that I don't get from locking my money into long-term investments that are "likely" to pay off in the long-run, but that require me to maintain my current income in the meantime.
There are obviously lots of factors in the example above: your age, the type of job you have (high stress high pay? something you might want to downsize? at risk for layoffs? or a 9-to-5 ho-hum job that you have no plans to change before FIRE and that is rock solid like working for Uncle Sam?), the certainty of your plans post-FIRE, etc.
But the bottom line, for me anyway, is that by splitting my savings between investments and paying down debt is a way for me to reach the flexibility and financial independence that fits my circumstances. Even if it is, perhaps, not the way to maximize my gains under the most "likely" scenario.
And in any case, it's certainly not comparable to revving the engine before turning off the car, which has been shown with certainty to be a harmful activity that has zero positive results.
