Author Topic: pay off student loans or leave the 401k alone?  (Read 647 times)

Ann12345

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pay off student loans or leave the 401k alone?
« on: June 28, 2018, 03:36:40 PM »
We have a student loan that  we owe $28,904 on and we have roughly 20k in our 401k. The 401k is in a Vangard target fund. Would it be better to leave the 401k alone or pay off the loan? We are currently paying $600 a  month on the loan, the min. payment is $200. While it would be nice to have the loan gone I don't think it would offset the tvm loss that we would incur, thoughts? 
On a totally unrelated note our dishwasher died recently that came with the house. Is handwashing or running a full load of dishes once a day more energy/water effecient? Just trying to figure out if replacing it is worth it. It seems as though we use much more water these days and that is the only variable  so perhaps a dishwasher is more efficient with the water.

BeardedMustache

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Re: pay off student loans or leave the 401k alone?
« Reply #1 on: June 28, 2018, 03:56:59 PM »
Even without details (your age, interest rate on the loan, income), it's basically never a good idea do take a distribution from a 401k to pay a tax deductible expense like this or a mortgage. You can add details and see just how bad of an idea it is, but it likely won't change the answer.

You're doing the best thing by plugging away at the debt and investing at the same time.

RWD

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Re: pay off student loans or leave the 401k alone?
« Reply #2 on: June 28, 2018, 04:32:53 PM »
Don't raid the 401k to pay off a student loan. See the Investment Order post.

bennion.r

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Re: pay off student loans or leave the 401k alone?
« Reply #3 on: June 28, 2018, 09:29:01 PM »
On the dishwasher question, I know some new highly-efficient dishwashers can use as little as 3 gallons for a load of dishes, which seems incredible to me. Google is telling me that an average dishwasher uses 6 gallons per load. So it's tough, though possible, to be more water efficient than a dishwasher. In my area, I pay maybe a cent/gallon, so the water cost isn't very significant. A dishwasher on a good sale might be $300 or $400, but last 10 years, so the dishwasher cost isn't enormous.

Personally, I think the time savings of the dishwasher dwarfs any other consideration, but then I have little kids. If it's just two of you, that might not be quite as important. But assuming you own the house, and might sell it someday, you'll probably want to buy a dishwasher someday, so I'd say might as well do it earlier and benefit from its presence.