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Pay Off Student Loans Fast

Jessica Said:

Should I pay off my student loans as fast as possible or just meet the min. payments?

We Answered:

If you are a teacher - don't pay them off.
There are some governement programs that will pay off your loans if you go to a "needy area".

Student loans do not harm your credit, they are installment student loans.
First I would like to see you having the following things.
- 6 to 9 months worth of living expenses in a discount brokerage account.
- Enough money in a savings to someday put 20% down in a home.
You'd be surprised some girl is going to marry you, and want a big house. You'll need a down payment.
- With your salary you could buy cars for cash. Start saving up and make that a life goal - no more financing cars. I've read that 50% save up for cars and just buy them outright.
Are you putting the maximum company match to your 401K?
Are you putting away 5K in a ROTH each year?
Charles Schwab is a good place to open a roth.

After all this ---- then you can pay off that student loan - lol.
Note: The student loan amount will directly lower the amount of monthly mortgage payment you will be able to afford - but still cheaper than any mortgage rate you'll get.
Interest rates - as you probably know could easily double in the next 10 years.
Keep that loan, unless you have nothing else to do with the money.

NOTE: Do not, ever, never, ever let any woman know how much money you have saved up.
Or what your salary is - you'll just get yourself a pretty gold digger that way.

Sherri Said:

What are some fast ways to pay off my Student loans? and/or the best methods to do-so?

We Answered:

try to get good grades so tuition can pay it for you or get a job and start doing odd jobs around the neighborhood if you can.: baby sitting, house sitting, shoveling snow etc...

Aaron Said:

How can I pay off my student loans fast?

We Answered:

OMG that's a lot of money
pay it off over time

Margaret Said:

Any advice on paying off student loans fast?

We Answered:

A second part-time job whose revenue goes strictly to reduce the debt until it is gone.

Matthew Said:

Should I pay off my student loan faster or invest that money in a IRA?

We Answered:

I think your dad is giving you good advice. That is a pretty low interest rate on your loans and if you put money into an IRA your annualized returns over the next 20 years should be well above 3.5%.

Another option to consider is to open a Rother IRA instead of a Traditional IRA. In a Traditional IRA you get the tax break now, but you have to pay ordinary income tax on your withdrawls in retirement. If you go with the Roth IRA, you don't get a tax break now, but all of your withdrawls in retirement will be tax free. This is a good option if you expect to be in a higher tax bracket in the future than you are in right now. Also, I think they raised the contribution limit to $5000 in 2008 for IRA's (you can contribute no more than the limit between the 2 plans).

Depending on how much extra money you are talking about you might be able to do contribute to the IRA and extra money to the student loan. I think maxing out the IRA makes more finanical sense, but there is a certain peace of mind that comes wtih paying off debt. I would try and max out the IRA first and then contribute a little extra to the loans (if you have extra income).

I hope this helps.

Willie Said:

How do you pay off $100,000 in student loans!? FAST?

We Answered:

Fast? You really can't pay off that kind of money fast. You're kind of stuck paying whatever you get with your jobs until you graduate. You could change certain courses to weekends possibly to work more hours. Filing for bankruptcy won't help you.

Brent Said:

Is it smarter to max out 401k and IRA contributions rather than pay off student loans faster?

We Answered:

Fennell, I think it's sort of a judgment call on your part.

When you compare the low rate of interest on the student loan with potential tax deferred returns on your retirement investment, it would seem you come out ahead in terms of total dollars. On the other hand, you have to consider that not paying more on your student loans means less cash flow in the future because you're paying longer on the loans.

I tend to like your idea of maxing the 401(k) contribution, and put half or maybe even 25% of max into an IRA (by the way, you should probably do a ROTH IRA as opposed to a traditional one because it's tax-free retirement savings, not just tax-deferred). Double or triple up on the loan payments, use some of the money for non-retirement savings (i.e., a rainy day fund) and you'll probably be in better financial shape to really dig into retirement savings down the road as your income increases and your debt load shrinks.

Good luck!

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