Hi all, been a long time lurker and I think now is the time to ask for advice.
I am about to graduate with a solid job lined up. I will graduate in December and my job will start in January. I will make $65k base, $7k signing bonus the first year, and a $4k relocation bonus. This job will set me up for a fast career progression and the salary will increase significantly over the years (will make about $100k 3-4 years into the job). Job security is also very high and while the career progression is not guaranteed, I am fairly confident it will play out how I want. My employer will match 75c per $1 invested in my 401k while contributing up to 6% of my pre-tax salary. My healthcare plans are also very solid and my employer has a pension plan.
It all sounds good but the problem is that I will graduate with $40k in student loans. They all have different rates (4-5% for most but I do have 3 with 7%) with an average rate of 5.53%. I do not have any credit card debt or other type of debt whatsoever. I am not sure whether to pay these off aggressively or rather to invest all my disposable income.
I was tentatively calculating a budget and I can afford to pay $1500 a month on my student loans and have them paid off in 2 years. However, it seems that directing $1500 of my monthly income towards student loans presents a huge opportunity cost for me. I believe that investing $1000 out of those $1500 would lead me to be better off in the long term (while paying $500 per month on the loans).
Navigating this process is a little hard because I am new to all of this. I want to be responsible but I want to set myself up for large capital accumulation in the long term, and it seems that aggresively paying off my student loans will not be the most efficient use of my income.
I will most likely use my signing bonus to get rid of the high-interest debt, but what about the rest? Any ideas?
Important to note: I am not very risk-averse because I anticipate being a high-earner in the future. I don't mind having debt over my head as long as I know I will get returns that are better than my cost of financing (student loans).
Has anyone been in a similar situation? Any advice?
Submitted August 11, 2020 at 10:23PM by SeaOtterFlex https://ift.tt/2XVk9MC
