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I do pay rent here currently. Housing prices have edged up on a whole in some parts of Southern California lately. I still don't see the rising prices in my exact area yet, but that is just based on searching and monitoring prices over the last year or so. I do plan on staying here for a long time, probably until I retire as I love my job and where I work.
I'm not too worried about my credit score because my score is already 780 and I doubt paying this off would have much effect on lowering my interest rates.
you are in the same boat as me. i have federal loans at 1.625% from 2004. private are 3 or 3.5%. i'm not paying any off early unless i come into windfalls, and i just bought a house in march. i am married, don't know about you, but i think the best bet is maybe double up on payments to pay it off quicker, while still saving towards your down payment and keeping the 6 month emergency fund.
what do you want more? own your place? or have no student loan payment?
my highest rate loan is 3.5%. i pay extra on it each month (especially cause i redeem my thankyou points through citibank for student loan rebate checks!), but i will notpay it off early. the interest rate is too low to warrant paying it off early. you can earn 3.5% tax free in many low risk muni bonds. so why pay off loan early?
if solely for piece of mind, then maybe. but financially speaking you're not saving much.
do you fall in the income range to write off student loan interest? it's low, so if you live near a big city you may not.
i'd put the money towards the house. especially given the near term prices and interest rates.
It's a fixed rate and I don't think I can write off the interest.
I think I want a home more than to pay off my student loans but then there is that part of me that wants to scream I'M DEBT FREE Dave Ramsey style. I'd be able to buy again in 2-3 years if I pay off my loans now. If I don't I could probably buy next year. I don't really see the market making a complete turn around in the next 3 years in Southern California but if a 400,000 home goes up to 450,000 by then, well then I made a bad decision.
You have to take the emotion out of the decision. Does it really benefit your situation to FEEL Good about paying off the loan?
The real question is what would you rather do with that money in your pocket right now?
Maybe with that money, you can put a down payment on a house, start a business, help a friend, invest in the market, etc.
If I had a 3.5% loan I would keep it. There are no other loans in the marketplace that I know that are as cheap is that. I would take that extra cash that is burning a whole in your wallet and do something great with it!!
So Cal is a beautiful place, but the housing prices, even with the recent reductions, are still way high. The anti-business politics of CA would make me think hard about living there long term.
That and Skynet, and the Governator...
OP you say you have a secure job, but job security is relative anymore. The high cost of living and anti-business environment will weigh on your employer. An ebbing tide eventually grounds most if not all boats.
That said if you like it there, housing prices have come down some, you might do well to buy. I can't say from here.
It's a fixed rate and I don't think I can write off the interest.
I think I want a home more than to pay off my student loans but then there is that part of me that wants to scream I'M DEBT FREE Dave Ramsey style. I'd be able to buy again in 2-3 years if I pay off my loans now. If I don't I could probably buy next year. I don't really see the market making a complete turn around in the next 3 years in Southern California but if a 400,000 home goes up to 450,000 by then, well then I made a bad decision.
Ah, the decisions.
well, the house may not go from 400-450, but interest rates almost definitely will go from 4.25 to maybe 5 or 6...
then, instead of having a house at 4.25% and a student loan at 3.5%, you'll have 300-350k financed at 4 or 6% instead of 4.25%.
honestly, at our age, it's tough to be DEBT FREE. are you BAD DEBT FREE? I am. Student loans were an investment in your future earning potential. Maybe we both could have paid less for college and ended up in the same spot. but a 3.5% rate isn't going to kill you.
I'd absolutely buy now at low rate, decent prices, and pay extra where you can.
don't do it because you'll be "debt free", cause you won't be once you buy a house. that was my logic at least.
well, the house may not go from 400-450, but interest rates almost definitely will go from 4.25 to maybe 5 or 6...
then, instead of having a house at 4.25% and a student loan at 3.5%, you'll have 300-350k financed at 4 or 6% instead of 4.25%.
honestly, at our age, it's tough to be DEBT FREE. are you BAD DEBT FREE? I am. Student loans were an investment in your future earning potential. Maybe we both could have paid less for college and ended up in the same spot. but a 3.5% rate isn't going to kill you.
I'd absolutely buy now at low rate, decent prices, and pay extra where you can.
don't do it because you'll be "debt free", cause you won't be once you buy a house. that was my logic at least.
You are probably right. I have zero debt besides my student loan. The credit card is only used to get points (pay it off in full every month). Our 2 cars are completely paid for. We pay our auto insurance yearly with a bonus I get. Our only bills are things like cable, cell phones, water, electric, rent etc...
You are probably right. I have zero debt besides my student loan. The credit card is only used to get points (pay it off in full every month). Our 2 cars are completely paid for. We pay our auto insurance yearly with a bonus I get. Our only bills are things like cable, cell phones, water, electric, rent etc...
you really sound a lot like me and my wife. we have solild income. she's in healthcare so her job is stable. my job is fairly stable. i have a 6 month emergency fund. i now have a new car payment because i changed jobs and drive to work (those 6 years with no car were awesome!), and i could have paid off my student loans in full instead of buying my house. instead, i bought a house, and at the end of the year, i'll use my first tax refund check to pay extra on my loans and mortgage. some of my student loans and all of my wife's are at 1.625% - i'm never paying extra on them!
you really sound a lot like me and my wife. we have solild income. she's in healthcare so her job is stable. my job is fairly stable. i have a 6 month emergency fund. i now have a new car payment because i changed jobs and drive to work (those 6 years with no car were awesome!), and i could have paid off my student loans in full instead of buying my house. instead, i bought a house, and at the end of the year, i'll use my first tax refund check to pay extra on my loans and mortgage. some of my student loans and all of my wife's are at 1.625% - i'm never paying extra on them!
I think you may have convinced me.
Interest rates this low with home prices 1/2 what they were 3 years ago = I probably shouldn't pass this up.
If you want to buy a home, buy a home because you need to. Lenders will look favorably at student loan debt compared to other debt because most student loans are fixed and backed by the government...I.E. Sallie Mae. I wouldn't be obsessed with paying off a cheap 3.5% fixed loan....be lucky you have it, most people today have rates around 6% on student loans.
Pay it off... but don't touch the 6 month savings... it's for unplanned emergencies. With the current state of the economy you can never count on your job to last.
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Don't pay it off
