paying off a student loan; what would you do?

[CA renter]

[quote=flu][quote=scaredyclassic]i guess what im thinking is, at 20 years remaining, at 4 percent, it’s basically like a cheap mortgage, without the tax deduction. Even over the last 10 years since sshe started th eloan, 300.00 means a lot less to us ina month than it did a decade ago. i’d be pretty surprised if the trend didn’t continue. an extra 300 a month isnt really going to give a lot more flexibility overall…[/quote]

ding ding ding….[/quote]

It depends. For many people, that $300 is more today than it was a decade ago. It really depends on your current, and future, job/income prospects.

[scaredyclassic]

i suppose. i don’t know. at some point, it’s just not much.

i gota few old mercury dimes the other day. was holding them. 1935. 1942. well worn.

a dime was an actual thing you could buy something with.

like an actual negotiable thing, made of 90 percent silver. someone in the past held one of these, went and bought a comic book. couple cigars. go to a movie. a dime now is essentially trash.

however you slice it, 300 is gonna be less later.

yeah it might be valuable to somene desperate an dbroke, just as a glass of water might end up being worth a lot to a very thirsty guy int he desert….but that doesn’t change the fact that it’s not much…

[joec]

[quote=CA renter][quote=flu][quote=scaredyclassic]i guess what im thinking is, at 20 years remaining, at 4 percent, it’s basically like a cheap mortgage, without the tax deduction. Even over the last 10 years since sshe started th eloan, 300.00 means a lot less to us ina month than it did a decade ago. i’d be pretty surprised if the trend didn’t continue. an extra 300 a month isnt really going to give a lot more flexibility overall…[/quote]

ding ding ding….[/quote]

It depends. For many people, that $300 is more today than it was a decade ago. It really depends on your current, and future, job/income prospects.[/quote]

This is also a good point, the $300 you pay off now can purchase so many goods. In 20 years, that same $300 is worth of a lot less in goods purchased so sorta why similar with Lotto winnings, you take a big hit to get all your money in today’s dollars. If you pay it off, you’re not valuing the cost of the money now vs much later.

Like a mortgage I guess…

This debate can be endless and I “get” why some people don’t want to have any debt, and I am not saying there is a right or wrong answer, but for me, if I don’t take the deduction, I will have to pay that deduction in income taxes so unless you can completely eliminate all your taxes, you’ll have to pay it some way or the other…Maybe you can move all your IRA to roth before then and that’s smart and something I plan to do too, but that’s a ways off for me.

Also, a lot of this has to do with personal experiences and circumstances…

We’re self employed, capital and cash flow is king and using it to close out a debt that is easily manageable is unwise for probably a lot of small businesses who are constantly starved for capital (like we are).

What if you or your wife suddenly decides to quit their job or you piss off a partner and get fired?

What if you wanted to start a business? Starting/running a business can be extremely expensive so having that cash on hand is a great asset. Also, if you loss your job, good luck trying to tap any loans/capital easily at such low rates.

Remember, Elon Musk practically had to file bankruptcy to keep Tesla and Solar City alive even though he was wealthy already with selling Paypal.

Again, I’m sure everyone is doing what’s best for them, but most financial advisers say unless you are extremely wealthy, certain debt isn’t the worst thing in the world.

Also, if you retire, maybe you could start writing off your loan interest as well (we still write off my wife’s loans).

[scaredyclassic]

the urge to pay off debt is almosta spiritual feeling.

a yearning to be new and free.

what is this about “jubilee” years in the torah. i think every 7 eyars, debts were forgiven?

there is something spiritually oppressive about longterm debt…

no it’s every 50th year? :

http://www.biblegateway.com/passage/?search=Leviticus+25%3A10&version=CEV

[an]

I’m totally with joec on this one. I’m in the camp of manage debt. Everyone have different tolerance for debt, so there’s no right or wrong answer. However, for me, I would know what my income would be every year, that number would be more firm in retire. As long as that deb is well below the income and manageable, then that’s perfectly fine with me. I value having capital more than worrying about manageable debt. I would be more worried when I’m debt free but cash strap. Having capital allow me a lot of flexibility and help me handle various different scenario.

[moneymaker]

Take out a Heloc for solar panels, write off the interest, buy a Tesla (keeps Elon Musk out of bankruptcy), of yeah get a tax credit on the solar and maybe even the car, keep the $50,000 in your 2 new safes in the form of silver. Right now I’m thinking I should be a disc jockey as I’m spinning pretty well. P.S.- Don’t forget the combination so when silver hits $50 you can sell right away!

[scaredyclassic]

i really want to use theextra money for consumption and fun but i’m so used to being frugal for so long we cannot seem to spend it. even witha kid in college, we save some…we are old…

[moneymaker]

A good home security system is also a must if keeping hard assets in a safe.

[scaredyclassic]

Just use a bank safe deposit box. Easier.

[scaredyclassic]

CEF easiest.

[Raybyrnes]

If you hate Sallie Mae why don’t you have the loan assumed by the William D Ford Direct Loan Program http://www.direct.ed.gov. With 50 K in debt you have the opportunity of extending the term to up to 25 years.

I would personally elect to make an interest only payment. There is a little secret to the Federal Loan program that once you ache paid on the loan for 25 years the remaining balance is forgiven. I am not certain if the 10 years you have put in would be counted toward the 25 years http://studentaid.ed.gov/repay-loans/understand/plans “If you have not repaid your loan in full after making the equivalent of 25 years of qualifying monthly payments, any outstanding balance on your loan will be forgiven.”

Additional benefits of this debt. In the event event of death or permanent disability this debt is forgiven.

4% is not a very difficult hurdle rate to outperform.

[cvmom]

Yeah but there is no feeling of freedom like being 100% debt free and having an F-U stash… Every day I go to work, I know I could quit if I want to. LOVE that feeling. Who knows what will happen (parents on East Coast get sick, kid needs major support time, etc.) Any of us could have some major bad news tomorrow.

So I vote for paying off all debt as soon as you can. But I think it is a very personal decision, depends on what you value.

[joec]

[quote=cvmom]Yeah but there is no feeling of freedom like being 100% debt free and having an F-U stash… Every day I go to work, I know I could quit if I want to. LOVE that feeling. Who knows what will happen (parents on East Coast get sick, kid needs major support time, etc.) Any of us could have some major bad news tomorrow.

So I vote for paying off all debt as soon as you can. But I think it is a very personal decision, depends on what you value.[/quote]

Yes, it really depends on how you “view” debt. Your situation can be viewed a different way however, but the good feelings you have is actually NOT because of being 100% debt free, but the f-u cash as you state above…

Say if you wanted to tell your boss to f-off or he fires you and you then want to start your own company, maybe doing the exact same thing to “show him”, you’ll probably need capital and unless you are excessively wealth which most people aren’t…closing out a low interest debt actually “limits” your flexibility since once you’re unemployed, no one will ever give you a loan…

I’m sure being self employed now and having had gaps in my employment I view things a certain way, but bottom line is having the cash allows you more flexibility.

Obviously, having it all with 100% debt free and a huge f-u stash is the best situation, but unless you are again, excessively wealthy, having the cash on hand is probably more flexible to deal with anything that happens or if it was 100% debt free and no cash vs. mortgage and huge cash pile, I’d say again to take the cash since it’s far more mobile (what if an earthquake knocks down your million dollar home or it got swallowed up by the ocean?) Deductible is 300k. Hope you “bought” earthquake insurance and still have the 300k cash as well.

The stash can ALWAYS pay your mortgage for many years and you can balance, say IRA withdrawals which are taxable to your mortgage deduction to have a 0 tax liability…etc…

If you had the mountain of cash, even with a mortgage, you can still “quit” as you say.

Oh well, people will do what they will, but consider some of the points above as well (the home getting destroyed sounds like a new good one to me).

[Author]

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