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Posted in Paying Your Bills
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Question By
KravenMaven

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Start Roth IRA or pay off student loans?
Hello!

I am looking to start investing/start paying off my student loans.

I am 28 and expect to be making $60k/year as a tutor

Assets:
$5,500 checking and low interest savings
$630 401k account (not currently contributing)
$20,400 car (conservative figure)
$2,500 random stuff I own

Liabilities:
$18,560 student loans
$10,180 car loan
no credit card debt

My expenses currently total ~$2k/mo

monthly averages (12 month dataset):
~$900 on car (Total cost of ownership; $600/mo loan payment; will be paid off in full in 16 mos)
~$600 on apt/food
~$55 on phone
~$70 on laundry & toilletries
~$100 student loan interest expense
~$150 savings expense
~$200 student loan payment

My question is whether I should max out my Roth IRA first before paying my student loans. I have $11,500 at 6.8% interest and $7,056 at 5.6% interest. I know that interest rate will be hard to hit with an investment account but I know there are tax benefits to having a Roth IRA that may supersede that interest. So I'm just not too sure where to put my money at the moment. Advice on the car would be appreciated too!

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Make sure you stay on time with student loan payments because they are fully collectable until such time as paid off.  There is NO statute of limitations, nor can the be discharged in bankruptcy.

Reply by
KravenMaven

3 Contributions
0 People Helped

Thanks for the response.  Any advice on my question specifically?

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