Looking for advice for what to do with my money when I start my full-time job in September. Currently have these loans:
Private loan: $4k balance, 3.49% APR, $252/month payment until 8/27
Federal Loans: $18k balance, 6.21% weighted average APR, deferred until November of this year. Minimum payment would likely be $120/month for 10 years.
I have a little bit of money in my Roth right now, and my employer offers a partial 401(k) match. I just hate the feeling of being in debt which is why this is a tough decision for me, and I don't like seeing $5k+ in interest added over the life of the loan. Would like to hear what you all think my main priorities should be. Thank you.
EDIT: missing information, 23 y/o, 80k pretax income, living at home for the first year
Contribute to 401(k) and Roth IRA or aggressively pay down student loans
byu/Impressive_Divide_24 inStudentLoans
Posted by Impressive_Divide_24
7 Comments
Take the 401k employer match and pay down the debt as fast as you can! Life (job loss, wedding, kids) can hit you fast and you won’t regret being debt free when it does.
If you have employer match, match the 401K just to the match. Dont contribute to Roth until you pay off your loans. The 401K match is free money, contribute that and pay off your loans with everything left
Without knowing your expected income & age this is hard to say. But your student loan debts are overall low – there’s no good reason to tote it around for 10 years.
Contribute to get the match, aggressively pay off the rest. Preferably while living at home so you can keep your expenses super low.
Editing in response to your edit – even with contributing to get your match you should be debt free in 1 year. Pay aggressively, start your adult life free.
Pay off those loans! Throw all the extra you can on it for the next few months and do it! Get the private one gone first and then do the federal ones. I’d also recommend splitting your payments into twice a month so that you can avoid some interest as well.
Returns are too good currently. My loans are 6 and 7%. I’ve made well over quadruple that in the market these last 2 years. Semis FTW.
You’re young and those balances are very manageable. Take advantage of the money saved while living at home to aggressively attack the loans.
Stop thinking about being in debt and start thinking about net worth. That’s the number that matters
Minimum payment for your Federal loans is going to be closer to $200/mo.
I’d max out the employer match on my 401k, max my Roth IRA contributions, then pay extra on the Federal loans. Direct the extra to the highest rate loan until they’re below 4%. At that point minimums on all and increase 401k contributions.