Invest or Student loans? Emergency Student Loans

You have to have earned income to fund an IRA. Yes, you can fund an index fund but. The first user makes an fascinating point. I’d go on and fund the index fund, but remember, you have to keep funding it to get it working for you.

it would be more prudent to keep the student loan in excellent standing by paying the requested minimum on time and overpay the principal on your mortgage with the extra money. knocking out principal in the first half of a home mortgage does a lot more to save you money than knocking out a student loan with 2% interest. i’m sure you know interest in a mortgage is front-heavy and re-amortized year to year, so if they are calculating your interest a year from now and there is 500 dollars less principal than there should be, then the payments are affected (in a excellent way) years down the road.

Don’t carry any loan that you don’t really have to have. You are a smart lady and you did answer your own question – pay off your loans ASAP. Why, because your loans will cost you money in interest. It doesn’t matter how “low” the rate is, you are still throwing away your interest money every year. $ 40 000 at (say) 5 % still costs you $ 2 000 this year. There is no way you can hide that fact. On a sliding scale as you pay off over the next ten years, you will have paid at least (at 5 %) $ 10 000 in interest alone. This is money right out of your life with NOTHING to show for it. After you have paid it off, that negative charge becomes a positive on your balance sheet. so, having paid it off you will “earn” $ 1 000 to $ 2 000 every year, by just breathing and getting out of bed. Not a terrible return on paying off your loan.

Pay them off ASAP! Life will creep up on you before you know it. You can become pregnant or your husband can face a medical issue or job loss & the student loan debt will place pressure on you & your marriage, even with your savings. If you pay off your mortgage & student loans ASAP, you can pile cash up like it was nothing & go on vacations or buy the car of your dreams without needing any financing from the bank!

You should up your loan payments to 1000-1500 a month.

I reckon your plot is the best. Home ownership may be considered “the American Dream” but for many it has become the American Nightmare. The problem is that many people consider buying a home to be an investment, and it really isn’t. Adjusted for inflation, the investment value of buying a home over the past 20 years is way behind other types of funds. And, there is a lot that can go incorrect in the meantime, causing many homeowners to face foreclosure and the loss of their homes. Renting gives you the most flexibility and is more affordable than owning a home at this time. And, $ 80,000 in student loans is a noteworthy amount. I strongly recommend that you pay down at least half of that amount before you ever consider purchasing a home. Congratulations on having $ 10,000 in an emergency account. But, if this amount of money does not cover at least 6 months of your current living expenses, contribute more to your emergency fund until you do have that much. Although lenders will approve you for more, do not buy a home if your total monthly PITI (principal, interest, taxes and insurance) payments are more than 25% of your yucky monthly income. Your total debt obligations (credit card, student loan, other loan and PITI payments) should never exceed 40% of your yucky monthly income. When you graduate, consider immediately consolidating your eligible student loans and selecting the “income-based repayment plot.” This option is new (July 2009) and gives you the most flexibility in making your payments – especially if you face a job loss or other hardship in the future. You can always make more than the minimum payment, though, regardless of the repayment plot you choose. Excellent luck and pleased New Year to you and your husband.