I've seen a lot of advice that says if your student loan interest rate is low enough, right about the level mine is at, you're better off paying the minimum if you are able to make reasonable retirement contributions and save/invest. However, Dave Ramsey and some people here recommend paying off all non-mortgage debt if you have the means, which is attractive to me from a psychological perspective. Which would you do in this situation? I've read the prime directive, but am curious what people think.
tl;dr: Should I (mostly) liquidate my emergency fund to pay off 4% student debt 4 years early?
Details:
- 30M
- Student Loan debt: Private 37k loan @ 4%, a little under 5 years remaining. Can't deduct interest anymore
- Monthly payment: $734
- Salary: 101k in high cost of living area, very low risk of job loss, but unlikely to make significantly more in the next few years. GF makes ~90k but isn't saving much
- Retirement: contributing 10% into 403b, employer contributes 10%. 80k among Traditional Rollover IRA and 403b
- Emergency fund/savings: 33k, should be 6 months without a change in lifestyle, nearly a year if I am extremely frugal. Deposited 200 of every 2-week paycheck to a HYSA, will be 250 going forward. Usually move some excess money from my checking every few months as well
- No CC debt, generally pay my cards off every month
- Renter, looking to buy a home in 3 years if possible, would need 100k+ for a downpayment between me and the GF in this area to avoid PMI
- Have access to an interest free 10k loan from work, if I need cash quickly
I know I probably have too much cash in the emergency fund, I was going to start putting some into a Roth and ETFs to try and grow that down payment more quickly, but having 700+ of additional cash flow every month would be fantastic. I think I could keep 5k in the fund and pay off the remainder by the end of 2020, if not a little sooner.
Submitted January 17, 2020 at 07:56PM by atf487 https://ift.tt/35ZV3gx
