Need some financial advice

[MetalMat]

As a recent college graduate I have about $23,000 in student loans to repay. However, the interest rate is pretty low, starts at 2.8% and could drop as low as to around 2.0% if I remember correctly.

Anyways I just got a job offer and will be making quite a bit of money with this job if I accept (which I will most likely, I start at 50k a year). My college loan is my only debt right now. Dont have a car note, rent an apartment, am single with no kids, etc.....

While I would love to be totally debt free, most people I am talking to say to invest the extra money I have into something like a Roth IRA since the interest rate on my college loan is so low. Any suggestions on what to do?

 

[spidey07]

invest

 

[Saijin]

I would allocate some money to pay off the loan quicker, but invest the majority of the surplus money. However, you should educate yourself on investing first before buying stocks, funds,, etc. And make sure you have some emergency money first before investing, say a few months worth of expenses, in case things come up out of your control.

 

[dullard]

Student loans are the best loans anyone can ever get. Don't get rid of them unless you have an unusual circumstance (such as being declined for loan due to too much debt).

[*]With paying off the loans, you have a guaranteed 2.8% return on investment (which may drop later to 2%). That is a fairly pitiful return.
[*]If you put it in a bank you can get ~4% for a CD. Note: 4% > 2.8%. Thus you'd be financially better off to pay 2.8% and earn 4%.
[*]If you put it in the stock market, you can expect a long term return of ~6%. Again, it is better to pay 2.8% and earn 6%.
[*]If you buy a house or car in the next few years the mortgage/loan could be 6%+. Again, you can use the money to earn 6%+ or 2.8%. Your choice.

I kick myself that I didn't take out more student loans at 3% and now I pay 4.8% on my house mortgage.

 

[Wonderful Pork]

don't forget you can write the interest of student loans off your taxes. so i'd say invest.

 

[ColdFusion718]

Originally posted by: spidey07
invest

 

[chrisms]

Smash the letters on your keyboard. The first three to come up, type them in Yahoo! Finance and make sure its actually a company. If it is buy it, if not, repeat the process until the letters give you something to invest in.

I did this and tripled my money by the end of the year.

 

[DaveSimmons]

Invest -- even ING direct pays more before taxes.

1. 1-2 months emergency cash at INGDirect
2. pay off CC debt and stay debt-free
3. 401k up to employer match
4. Roth IRA max out, as always I suggest Vanguard.com and VFINX
5. (after 1-4) more 401k since you make 20-35% year 1 in tax savings

6a. regular brokerage account, scottrade or vanguard or...
6b. increase emergency savings a bit and put house down payment money there too

 

[qaa541]

Originally posted by: DaveSimmons
Invest -- even ING direct pays more before taxes.

1. 1-2 months emergency cash at INGDirect
2. pay off CC debt and stay debt-free
3. 401k up to employer match
4. Roth IRA max out, as always I suggest Vanguard.com and VFINX
5. (after 1-4) more 401k since you make 20-35% year 1 in tax savings

6a. regular brokerage account, scottrade or vanguard or...
6b. increase emergency savings a bit and put house down payment money there too

This is your best bet

 

[Noirish]

do them all if you have $ to spare.