The Money Mustache Community
Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: MoneyCat on October 03, 2014, 01:41:30 PM
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I did some calculating today and I will pay off my student loans in four years at my current rate of payment. I could reduce that time to three years but it would mean not funding my retirement accounts at all for those three years. What would be the best decision here?
I still owe $69,000 in student loans from Direct Loans. It used to be much higher because I used student loans to pay for about 85% of my entire college and graduate school years (including living expenses).
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what do your interest rates look like?
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Fully fund the retirement accounts unless the interest rate is over 6%.
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The interest rate on my student loans is 5.25%. My employer does not match my 403b (because I am supposed to get a pension which will probably no longer exist when it would be time for traditional retirement.)
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If your employer matches anything I would contribute enough to get that and put as much as you can into paying off the loans quickly. I would prefer freedom and flexibility sooner.
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You're pretty much in a grey area IMO. >6% SL rate then pay the SL. <5% let the SL ride. 5.25% is a toss up.
In you're in 25% marginal tax bracket then I would fully fund retirement accounts for the tax savings.
Since it's *only* one more year of SL payments, I think I would fully fund 403b.