Life Is Good

[Error]

I'm in the process of making my final payment on my student loan. I went back to school in 2006 and have been steadily paying it off since graduating for years. There were times I might have been able to pay it down faster but some shit would always pop up a week later, so I don't feel so bad about taking the long approach. And since the government wrote off the first 2 thousand right at the start I don't even feel like taking this long to pay it off cost me anything in extra interest payments.

[kingoffighters]

Not sure I follow. I'm paying approximately $700 a year in interest, of which 100% is tax deductible, so I am in essence paying 0% interest since it all comes back to me at tax time.

If your APR is 6%, then your savings portfolio return should be much higher for you to save instead of paying off your loan as quickly as possible. If your portfolio returns under 6%, then it doesn't make any sense to save because by paying your loan off instead, you are guaranteed the APR rate as your "return".

Of course, this doesn't take into tax effect so you will have to account for that. Sounds like your loan is not that big that the tax deductible is the better choice, but probably doesn't apply to most people.

[bbobb]

If your APR is 6%, then your savings portfolio return should be much higher for you to save instead of paying off your loan as quickly as possible. If your portfolio returns under 6%, then it doesn't make any sense to save because by paying your loan off instead, you are guaranteed the APR rate as your "return".

Of course, this doesn't take into tax effect so you will have to account for that. Sounds like your loan is not that big that the tax deductible is the better choice, but probably doesn't apply to most people.

Yep exactly that. What you're saying makes sense when it's a regular loan or if interest exceeds the deduction but when I factor in the tax deduction it makes nonsensical to pay it off early.

[GohanX]

If your APR is 6%, then your savings portfolio return should be much higher for you to save instead of paying off your loan as quickly as possible. If your portfolio returns under 6%, then it doesn't make any sense to save because by paying your loan off instead, you are guaranteed the APR rate as your "return".

Of course, this doesn't take into tax effect so you will have to account for that. Sounds like your loan is not that big that the tax deductible is the better choice, but probably doesn't apply to most people.

I personally subscribe to the theory of "debt sucks and I want to pay it off as soon as possible." I certainly understand the math of what you're saying, but you have a lot more freedom if you pay that stuff off as soon as you can. How many people stay stuck in shitty jobs they hate but pay well because they need the security to pay off student loans and mortgage payments?

[kedawa]

I pay off debts as quickly as I can. I just hate having t think about it.
It makes lending money to anyone very frustrating because I expect them to have the same motivation to pay it back, and then I see them buying frivolous shit instead of paying me back right away, and I end up hating them for it.

[Error]

Thats why I don't lend people money.

[Some Stupid Japanese Name]

I've had that happen to me before.
Guess who get denied the next time they "needed" some money?

[GohanX]

If I have it I'll just give it to the person. If I get anything back, bonus. It's not worth it to strain friendships over money.

[YellerDog]

Same. You don't just give somebody money and then expect that you have a lien on their happiness until you're paid in full, what kinda poor expectation setting on your part is that? You helped out. It'll come back around or it won't.

[Some Stupid Japanese Name]

A friend would never put you in that position.