Mustachians I've been planning out my next 12 months of my game plan, and I come to you with a question.
Most everyone here seems anti-debt (and rightfully so), but surely pre-paying a loan isn't always the "right" move. For example, I have student loans @ 2.9% interest with about 35K balance and 19 years remaining (I just started repaying them this year).
In planning my next 12 months, it'd seem to me that paying more than the minimum on these loans is a worse move than (say) putting the same money twords my IRA.
More concrete numbers:
Take home pay: $2,400 bi-weekly.
Come July/august I'll be free of all consumer debt. The plan is to take the snowball I've been using for that ($650/mo) and max out my IRA (about $450/mo). Leaving me with the choice of opening an IRA in my wife's name for the remaining $200/mo, or paying down another loan.
This leaves me with the following debts:
Student loans: $199/mo, $35K balance, 2.9% interest, 19 years remaining.
Mortgage (with taxes, insurance, etc): $1,300/mo, $184K balance, 3.5% interest, 29 years remaining.
I see the value, and could be talked into pre-paying my mortgage... But, when I look at the student loans and see an interest rate below 3% with no physical asset attached to it, I just cannot see the value in pre-paying that.
What say you?