Bronte wrote:rayiner wrote:I don't disagree with your math, but I disagree with your premise that $10k is so much money that it should be determinative of your savings approach. In the grand scheme of things, $10k is a drop in the bucket.
Plan your savings based on your life plans. Do you want to buy a house? If so pay the minimum on your loans and save the extra for a down payment. You'll save more money in the long run by being able to put up a huge down payment then you'll loose in extra interest on your student loans. Do you intend to spend a few years in big law then take a low-paying public interest job? If so pay the minimum on your loans and take advantage of IBR. Do you intend to spend a few years in big law then go to a low paying private sector job? Then by all means pay off your loans as quickly as possible.
Also, re: "this market" remember we're talking about the next 3-5 years.
I think we're on the same page then. The point I'm just trying to drive home is that if you're choosing between a long term financial investment (bonds, stocks, etc.) and paying down your loans, you should only choose the former if you think you can earn greater than 9% (if stocks) and 10% (if bonds or other fixed income securities).
Yes, if you're putting money into long-term investments as an end in itself (as opposed to just a place to park your money) I agree that paying off your loans gives you a better return. My point is simply that if you've got other life goals, $10k isn't so much money that paying the IBR minimum and holding the cash is an unreasonable option. If you think you might leave big law and decide to start a business, go ahead and save the cash---even if you chicken out you won't be losing much.