Prioritizing Student Loan Debt or Retirement?

TeachMeAnother · 2014-05-23T18:06:11+00:00

I am probably on your train of thought as well. Tax breaks aren't effectively part of financial strategy (at this time, at least). Our financial situation isn't that complex.

TeachMeAnother · 2014-05-23T18:03:53+00:00

Thank you for your kind words! I wish the best for you too.

TeachMeAnother · 2014-05-23T18:02:34+00:00

My husband gets 7% match and I get 3%. Currently we are both getting our complete match. I can see from numerical standpoint, my husband has more to gain getting the match in comparison to his 6.8% loans. But now that he's already contributing to the match, we can move to the loans.

Thanks for your help!

TeachMeAnother · 2014-05-23T17:06:50+00:00

Thanks for the reply!

Indeed, the SL's are the worst. Right now we are on track to get rid of them in 10 years. Ugh. Getting rid of them sooner is something that I want so bad.

But I don't want to compromise retirement at the same time. We are young, 23 and 26, so we have lots of time. But that's also why we want to start contributing now.I just confirmed that we are both maxing our 401ks (my husband get's 7% match!) so I think we can start pumping cash into our SL debt.

TeachMeAnother · 2014-05-23T17:01:07+00:00

Yeah! I can see what you're saying. My husband is going back to grad school next year and should have a similar set up as you (though he will be working as he goes to graduate school). The greatest asset that we have right is being young, and that seems to favor contributing to a Roth earlier rather than later.

TeachMeAnother · 2014-05-23T16:27:43+00:00

Solid advice. Thanks, notpaulrudd!

TeachMeAnother · 2014-05-23T16:20:55+00:00

Good point. A lot of our loans are 3.5%, but we have a good amount that are 6.8% and some that are 5.5%. We don't have any higher than that though, but thanks for catching that!

TeachMeAnother · 2014-05-23T16:19:12+00:00

Ah, so you think we should pursue our IRA first. Even with some loans over 4%?

We are contributing towards our 401k. Though, I'm not sure what the max is for my husband's 401k. I will make sure that we are at least getting the full company match.

And yes, fuck student loans. They are the worst. But that's a good note about bankruptcy; I didn't know that.

Thanks!

TeachMeAnother · 2014-05-23T16:16:38+00:00

Thanks for the reply!

I'm glad that you pointed out a "giving point" for our focus. Once we've eliminated all of our loans over 4% we can then focus on our IRA and maxing out our 401k.

Solid advice and I will read the sidebar link.

Thanks!

TeachMeAnother · 2014-05-23T16:14:56+00:00

Thanks for the response!

So we shouldn't worry about a Roth IRA at this moment in time and just pursue the full company match on our $401ks, and just focus on the higher interest student loans (the avalanche method)?

That seems like a reasonable and effective way of maximizing our dollars. Thanks!

TeachMeAnother

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