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I have $10,238 in unsubsidized student loans (@ 3.5% interest rate).
I have ~$15,000 in subsidized student loans (@ 5% interest rate), which are in deferment for another 2 years.
I contribute 15% (+4% company match) each month to my 401k.
I have no Roth IRA.
Should I pay off the unsubsidized student loans, use the money to start a Roth IRA before the April 15th deadline for 2009, or use it for something else?
The April 15th deadline means nothing with a Roth since you put the money in after tax. You can only contribute $5000 to a Roth so I would put $5000 into the Roth and put the remaining $5000 into your emergency fund (assuming you have adequate life insurance, disability ins, etc.).
I hate debt, so personally, I would pay off one of the student loans just to make it go away.
However, at those low interest rates, I don't think that is the best overall advice for someone else.
I would probably invest $5000 into your 2009 IRA, $5000 into your 2010 IRA, and put the rest into an emergency fund, or if you already have a sufficient emergency fund, pay down one of the student loans.
I have $8k / 4 months of living in an emergency fund.
I would put $5k in the the Roth and $5k into your emergency fund. 4 months is ok but most people are finding it isn't enough if they lose a job and are striving to get closer to a years worth of funds in their emergency fund.
I would put it into retirement. Isn't the student loan interest tax deductible? Paying off your loans would be a double whammy because you are not getting the retirement growth or the tax deduction.
I'd put 2k into your emergency fund to make it an even 10k (and put half of that into a 6 month CD), then 5k in the 2009 Roth (you have rest of year to get the other 5k for 2010...btw I like a fat dividend stock like PG, PM, SO to let it sit in for 30+ years) and pay down 4k of debt.
Then again I think the ability to get credit for the next few years may be harder, so knocking out a loan, even at low interest, may be a good idea.
Only a fool would invest that money for the future. You might die tomorrow. Live for today. Coffins don't have pockets.
Here are some better uses for that $11K:
Buy $11K rims for your 1991 Camry.
Save up another $39K, get married, and have a $50K wedding reception that lasts four hours. Make sure your party includes monogrammed toasting flutes and monogrammed napkins.
Use the $11K to fund the premiums for an "extra, personal" HMO on top of your employer provided medical coverage. (You can never be too insured.)
Consider using the that money to make an addition to your home in the form of an additional formal dining room. If one formal dining room is useful, two must be even more useful.
Instead of going to Supercuts for $11, you can now afford to go to a fancy stylist for $50.
Use it to order every premium movie channel for three years.
Lottery tickets, lots of lottery tickets. Nothing beats the ROI.
You can now subscribe to all sorts of magazines.
While everyone else is getting their movies from The Pirate Bay, you can now buy and own DVDs.
You can now afford to take up smoking.
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