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I can either A, pay off my student loan faster by paying 2.3 times the monthly payment, split into two payments per month...so i can make 13 full payments per year, instead of 12
or I can B, pay it off at the standard monthly rate...this would allow me to have more flexible income in the short term, but I would be paying way longer.
Using a simple calculation, if I do A I should be able to pay it off in 5 years or less total interest paid by me is 3000. If I choose plan B, I'll end up paying 11000 in interest and it will take me 16 years, if not longer.
I know this seems like a relatively easy answer, but when I discuss these things will older folks they always say, well there's a reason for the loans, as if that seems to justify it. Or they try to stress the importance of saving more money for retirement and investing more into a 401k, the way I see it, once I pay off my student loan debt I'll pretty much a free bird, no debt and able to put more into 401k.
First, the interest rate is tax deductible. So you won't be paying 4.7% as long as you are reasonably employed (assuming the rate is flat).
Second, the market averages about 9%-11% in gains. That's quite a buffer.
Third, if it's a federal loan, you can defer it when you hit hard times (unemployment) and it can be dismissed if you haven't paid it off in 25 years or if you become disabled. God forbid you paid it off, became disabled, and have no cash on hand.
First, the interest rate is tax deductible. So you won't be paying 4.7% as long as you are reasonably employed (assuming the rate is flat).
Second, the market averages about 9%-11% in gains. That's quite a buffer.
Third, if it's a federal loan, you can defer it when you hit hard times (unemployment) and it can be dismissed if you haven't paid it off in 25 years or if you become disabled. God forbid you paid it off, became disabled, and have no cash on hand.
the interest rate is tax deductible up to 2500 per year, the slower i pay on it i wont be coming close to 2500 yr, its not all that much of a help to be honest.
4.7 is flat, which is a fixed private loan.
as far as 401k is concerned, if i choose to pay off my student loan debt and not to invest into my 401k i would be losing around 3500 in match money (for what i can afford anyway). so 8k vs. 3.5k i think its best to just pay it off now and be done with it.
the interest rate is tax deductible up to 2500 per year, the slower i pay on it i wont be coming close to 2500 yr, its not all that much of a help to be honest.
4.7 is flat, which is a fixed private loan.
as far as 401k is concerned, if i choose to pay off my student loan debt and not to invest into my 401k i would be losing around 3500 in match money (for what i can afford anyway). so 8k vs. 3.5k i think its best to just pay it off now and be done with it.
don't EVER leave free money on the table. EVER.
start your 401k to at least get the match, then prioritize the SL to get that taken care of. I paid off my student loan as soon as I could (and as soon as I realized after 10 years of paying I hadn't made much progress paying the minimum, so I went to an 18 month plan---paid $1k/month...now it's gone!!!)
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