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I’m an SC but have no MBA. At this point (29, married and expecting kids, have a house) is it worth it for me to pursue an MBA? I have a lot of family responsibility coming up so not sure if I can afford losing income for 2yrs and take on 100k+ in debt. Am I thinking too short sighted? Will having an MBA have a dramatic impact on my career here at Deloitte? Figuring this out is my New Years resolution next year.
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Well if you invest, the interest is a reduction from whatever return you make in your investment.
So you paying your debt off is actually a risk free return when you look at it in terms of future cash flow.
Good point
I’d invest. You have low interest rates on your student loans (compare that to avg stock market returns). If you do make an extra loan payment, pay off the highest interest loans first.
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I was in this situation. I decided to pay it off instead of invest it. Instead of putting my bonuses in the market or into my mortgage (with a higher interest rate than my college loans), I paid off my college loan balance. Felt great. Still feels great 10 years later. Because eliminating one type of debt in one fell swoop, felt better mentally for me than making a tiny dent elsewhere (if I put it towards the mortgage). I had 15 years to pay it, I paid it in 11. It's an accomplishment (especially compared to now because apparently nobody pays their student loans now)
This was my tactic too - to pay off my student loans. The peace of mind of no longer having debt was worth more to me than the estimated upside of investing somewhere else
Looks like you have 5% rate. Which is an APY so your interest paid is actually more than 5% of 19k. So for this to make sense you need to make more than twice as much of more than 5%. So if youre confident you can make more than 11% on an investment of $19,000, then yes invest.
If not, then you should pay your debt off
Yes, youre restating what ive said.
He just needs to achieve a return greater than twice the interest on his debt.
Now if you want to get into some real nickels and dimes return calcs the debt payment also has a tax shield associated with it and can be deducted from his income.
So if he did well this year with income, this year might be the year to pay down debt. And interest.
Market is just not risk free. Thats all im saying.
pay off your loans
Some of your loans are at a higher interest rate — pay those off. Keep the loans that are at lower rates. You preserve some liquidity, and can make the same or a bit higher interest rate by investing it.
Cue Dave Ramsey
Student loan interest is also tax deductible up to a certain income threshold. Include that if applicable