Anonymous User wrote:the consensus seems to be you get the better return on your money by paying down 4-7% loans than holding it in a low-interest savings account
This seems to be more than just the consensus, its a hard economic reality that you are losing money for every dollar you leave for a year in a savings account that has a lower interest rate than your student loans.
Anonymous User wrote: I'm mostly doing REPAYE b/c I determined I don't want to stress or even think about loans at ALL and highly value this.
It seems odd to me to put a lot of effort/thought into wealth accumulation/maximizing investment returns while knowingly ignoring a pretty crucial aspect of your overall return on your investments (especially if you have 6%+ rates on your loans). Paying off your loans with REPAYE over 25 years could very well eat up all of your net returns elsewhere. Am I missing something?
To be honest, I'm quite new to implementing a plan for wealth accumulation and wouldn't claim to have thought or researched everything nearly enough. But I'm learning every day.
Part of what held me back was catching up on high-interest debt (from bar-study period and post-bar vacation); as well as having to sink a lot into retaking the bar. I feel like I can now finally look forward to being smart about this, and the 401(k) maxing is a priority there. I'm only on track to be a few thousand shy of the 18k max, so should be able to account for that by the year's end with minimal changes to my savings goals.
As for doing REPAYE - as I've indicated, I place a lot of value in the security of it at the moment to see how my first year or two works out career-wise. Hopefully smart financial decisions elsewhere can help offset the long-term loss I'm eating here. Once I feel more certain of where I may be long-term (if it's soon enough), I may change course and dump savings into loans and rush to pay off everything.
To be clear, my goal isn't absolute efficiency (I acknowledge that taking the long-term interest loss isn't optimal in terms of pure cash). However, I want to live comfortably in my 20s, while retaining some sense of security and otherwise making reasonably responsible decisions.