First, my question is simply whether I should, in terms of long-term monetary gain, pay down my student loans neglecting my 401k, or prioritize investment in my 401k?
Now, my new job coming out of college and other financial information that I can think of
- Salary: 96,000 plus discretionary bonuses
- RSUs: 2000 stocks (125 per quarter over 4 years), currently valued at about $10/share
- Alimony: I expect to pay 35% alimony to my ex-wife, so ~33,000
- Child Support: We have no kids!
- 401k: The company will match half of my investment to a maximum of 3% of my income (so they will pay 3% if I pay 6%, and if I pay more than 6% they will still pay 3%).
- Loans: About $40k in loans, with an interest rate of I believe 6.8%
It seems to me that there are two obvious options which present themselves. The first option is to ignore the 401k for now and pay down student loans. The second option is to invest 6% of my salary into the 401k, and pay the rest into student loans.
The naive and probably incorrect calculations say that I'm getting 50% extra income on the 401k, which outweighs the tax credits and 6.8% interest on loans, so I should invest the 6% into the 401k firstly and secondly pay off loans with what's left over.
But these are back-of-the-napkin style calculations and are naive in nature. What should I
actually do?