Married (22M/21F), pay off loans or invest?

[extremedefense]

Life Situation: My wife and I have been married for almost three years now, so we were able to claim the American Opportunity tax credit for those years ($2500 per student * 2 = $5000 each year). We live in Texas, and are both graduating with our bachelors in Software Engineering.

Gross Salary/Wages: I am working 40 hours a week making $61,000, and finishing my degree. Once I have it, I should get a pay raise. My wife is a full time student, and will (hopefully) get a job when she graduates in August making $70,000. My take home is $1,947 every other week.


Expenses:
                          Per Week   Per Month   Per 1/2 Year   Per Year   Per Paycheck
Savings                   0                0                0                   0                 0
Loan Payback          0                0                0                   0                 0
Gas                        32             139            832              1664              64
Car/Emergency      0                0                 0                 0                 0
Car Insurance        0                0                 0                  0                 0
Internet/TV            8               36             216                432              17
Food                      40             172           1032              2064             79
Pets                        2               10              60                120                5
Rent                      277          1200           7200            14400           554
Living Essent.       12               50             300                600              23
Netflix/Hulu           5                23             138                276              11
Amelia (car loan)  85              370            2220             4440            171
                     
Total                     461           2000          11998           23996           923

Per paycheck we have $1,947 - $923 which leaves us with roughly $1,000 surplus each paycheck.

Credit cards-
Card                                 Balance      Limit    APR%
Bank of America 123           103         2500   11.49%
Bank of America 123 #2        9          1500   11.49%
BoA Better Balance            7,107       8000   0% until May 17th  2017      //from student loans (see note below)
Citi Simplicity                     3,246       5300   0% until March 19th  2017  //from student loans
Capital One Quicksilver      4,173       5000   0% until May 4th  2017       //from student loans
Cap1 Quicksilver #2            188         8000   20.3%
Discover 1                            93          1000   20.49%
Discover 2                            26          1300   17.49%
Wells Fargo                           0            1200   14.4%

Grand total = $14,945 @ 0% interest (we pay the non-promotional cards in full each statement)
(The reason we have so many high-balance 0% cards is because we had Discover Private loans that were accruing $30 dollars a day of interest, so we transferred them all to 0% cards, knowing we'd be able to pay them all off by the time the promotion ended)

Loans-
Car loan is $18,200 @ 2.49% interest
Loan name   Amount   Minimum payment   APR%
Fedloan 1     1000        10                           4.29
Fedloan 2     1000        10                          4.29
Fedloan 3     4500        46                          4.29
Fedloan 4     5500        55                          3.76
Fedloan 5     6000        62                          4.29
Fedloan 6     7000        70                           3.76
Greatlakes 1   5500     55                           3.76
Greatlakes 2   6027     42                           3.86
Greatlakes 3   6952     49                           4.66
Greatlakes 4   7000     70                           3.76
         
Grand total   $50,479   $449 per month starting December 2017   4.06% avg

Investments:
Account                Balance   Interest APR
Ally                       29,000   1.00%
Merrill Edge IRA   4,380      SPY
Merrill Edge CMA  600         Cash
 
Specific Question(s):
We are keeping $14,500 in the Ally account to pay off the 0% cards before their promotional period expires (to collect that sweet $12 a month in the meantime!), and the other $14,500 is for emergency fund. What should we do with our extra $1000 per paycheck? We get 30 free trades each month with our Merrill Edge account, so what ETF’s should we buy? Do you think we should invest in the stock market and make minimum payments on our student loans for 10 years (because the interest rates on the loans are roughly 4%), or pay off the loans completely (for a ‘guaranteed’ 4% return)?

[Vindicated]

I may be biased, because Student Loans have been my largest struggle, but I'd focus on knocking those out ASAP.  Could you make more by investing?  Sure, but you could see a loss if the market drops off in the near future.  I really think that being debt free will be much more rewarding, and open up your options moving forward.

Really, there is no wrong choice for you guys.  You're in decent position, and have a good outlook, whichever you choose.

[I'm a red panda]

Does your company ofer a 401k/403b with a match? I would for sure invest enough to get the match.
Then I'd tackle the loans.

[extremedefense]

I may be biased, because Student Loans have been my largest struggle, but I'd focus on knocking those out ASAP.  Could you make more by investing?  Sure, but you could see a loss if the market drops off in the near future.  I really think that being debt free will be much more rewarding, and open up your options moving forward.

Really, there is no wrong choice for you guys.  You're in decent position, and have a good outlook, whichever you choose.

Thanks Vindicated! I think we will pay off the >4% loans, and the smaller ones we will pay off on the 10 year plan, with the autopay 0.25% discount so it would be ~3.51% APR for the rest of the loans.

Does your company ofer a 401k/403b with a match? I would for sure invest enough to get the match.
Then I'd tackle the loans.

They match 4% starting after 12 months, and my 12 months starts in March 2017. In 2018 we will probably max our 401k at the $18,000 per person.

[MDM]

I think we will pay off the >4% loans, and the smaller ones we will pay off on the 10 year plan, with the autopay 0.25% discount so it would be ~3.51% APR for the rest of the loans.

They match 4% starting after 12 months, and my 12 months starts in March 2017. In 2018 we will probably max our 401k at the $18,000 per person.

A fine plan (assuming you do get at least the match in 2017).

[therethere]

I recently paid off all my student loans above 5% and then made a payoff brokerage account with what would have been snowball payments on the student loans. Although its mathematically worked towards my advantage (~5.3k in gains above the extra interest paid on student loans) I wish I didn't work it that way! There's an emotional cost with having student loans still on your liabilities side (that I completely ignored). I would advocate to max your 401k's and Roths then pay off the rest of the student loans with the excess. It will be nice living your life without having an asterisk next to student loan payments.

[Prairie Stash]

I would use my EF to pay down the loans ASAP, probably Greatlakes 3 and Fed loan 1&2. One of the quirks with a high savings rate is you can fund any emergencies out of free cash flow. If you're skittish then wait till August when the partner has a job, then kill those loans.

Then take half your savings into investment and half into loans/house fund. Get started in investing ASAP, its a good way to learn all there is to know before you have large amounts of cash. If you have to ask where to invest then you should probably start learning now, I recommend easing into it. People who wait seem to keep waiting long after they should have started...its not just the numbers its getting into the habits.

Paying off loans makes everything else in life easier, like buying a house. Its also fun to finish them, I got a small thrill every time I closed a loan.

[extremedefense]

I would use my EF to pay down the loans ASAP, probably Greatlakes 3 and Fed loan 1&2. One of the quirks with a high savings rate is you can fund any emergencies out of free cash flow. If you're skittish then wait till August when the partner has a job, then kill those loans.

Then take half your savings into investment and half into loans/house fund. Get started in investing ASAP, its a good way to learn all there is to know before you have large amounts of cash. If you have to ask where to invest then you should probably start learning now, I recommend easing into it. People who wait seem to keep waiting long after they should have started...its not just the numbers its getting into the habits.

Paying off loans makes everything else in life easier, like buying a house. Its also fun to finish them, I got a small thrill every time I closed a loan.

I like your idea. I paid the Greatlakes 3 from my savings, and the Fedloan 3. Fedloan's 1 and 2 are subsidized loans (I forgot to mention). Finally, I paid Fedloan 5 which was unsubsidized, which leaves us with roughly $14k in savings, which we can replenish, and still cover the credit cards before their 0% promo expires.

Once the repayment period begins, we'll knock out the subsidized >4% loans, and the rest we will invest / save for down payment on a house.

Thanks for your advice!