The Money Mustache Community
Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: SpendyMcSpend on April 19, 2015, 04:24:32 PM
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I will be saving between $2000-$3200 a month going forward. I'm 32 years old.
Student loans:
$20,000 at 3.17% variable (around 2.6% over LIBOR, variable) max interest rate is 25% - minimum is $235 a month until 2023
$13,000 at 6.55% minimum is $167 a month until 2022
$14,000 at 2.62% minimum is $82 a month until 2033
Liquid cash: $3500
Credit card debt: $900
Current 401k balance: $111,000
As the cash comes in, should I be saving for a down payment (should take about $100k for a 20% down payment should I buy a house in the future so it will take me a few years to save this up), paying off one or more of my student loans or maxing out my 401k instead of having cash come in after-tax? My yearly income is 95,000 after bonus in early febs but salary is 85,000.
Pros and cons to each? I am happy to answer more questions also. I might need a little cash for a wedding in the next couple of years also and need to replenish my professional wardrobe as well.
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max out 401k up to employers match (nothing beats 50%/100% return), pay off the loans with everything else
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401k up to match, then the 6.55% loan, then HSA, then 401k to maximum, then IRA, then taxable. All the while paying the minimum on the ~3% loans.
Didn't have that option for voting....
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401k to match, then credit card debt, then 6.55% loan, then add more to 401k to avoid taxes while paying down other loans. Assuming you are single with no mortgage or dependents and not a lot of deductions, a lot of your income will be taxed at a high rate. You can deduct only a certain amount in student loan interest, but it's also good to have that debt gone asap to free up money to invest in something else.
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Seems like there's no reason you can't max 401k and pay off the high interest SL
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Seems like there's no reason you can't max 401k and pay off the high interest SL
So down payment to diversify my long-term investment holdings is not on the list yet? I agree that the loan should be first. I'm a little concerned that we might be at a market top so wonder if housing might be a better idea than more stocks.
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401k up to match, then the 6.55% loan, then HSA, then 401k to maximum, then IRA, then taxable. All the while paying the minimum on the ~3% loans.
Didn't have that option for voting....
+1.