I have a question regarding a large Student Loan balance and Company Stock Plan.
My wife currently has a large Student Loan balance. (See details below) We are paying off about $455.00 of principal a month, and throwing any windfall money at the one with the highest interest rate. We are paying about $230.00 of interest on these a month right now. (OUCH!)
Reamaining balance $49,000 (interest rates scattered between 4.18% and 8.4%)
Minimum PMT $533
Actual Payment $686 (Min payments on all loans, any extra goes to the one with highest interest rate)
Now, I understand that my TOP priority is to get rid of these loans. My company offers a nice 401(k) match. They match 75% of my contribution up to 8% of my paycheck. So, I contribute 8% and actually get 14%. That seems like a no-brainer to continue. But, they also offer an Employee Stock Purchase Plan at 85% of the stock’s value on either the first or last business day of the six month cycle, whichever is lower. I have been using 2% of my paychecks towards this (about $40 a month), and the value of that account is currently $5,300 and growing fast between the contributions and quarterly dividends.
By my calculations, we will have the Student Loans paid off in about 6 years if we maintain the above monthly payments and apply our annual tax return and work bonus windfall each March (about $4,000 to $5,000). Plus, we are working on becoming more mustachian, and increasing our monthly payments towards the loans cutting that time down as well.
My plan was to just continue what we have been doing, and have a large ESPP account by the time we pay off the loans in 6 years. But after reading this site more, I am considering the option to cash out my whole ESPP account to apply to the loans, and not contribute again until the loans are fully paid off.
What do you think?
Our combined income is about $100,000
Between retirement accounts, a house, day care/general child needs, and other fixed expenses, we have very little left over each month. (as stated above, working on becoming more mustachian to increase this!)
No other major debt besides a mortgage ($155,000 @ 3.5% on a $205,000 house)
Wife is completely on board with whatever financial decision I make