{ "media_type": "text", "post_content": "Recent grad: would you prioritize money to pay down a $45K student loan debt or maxing out 401K at 6%?", "post_id": "5bec763e8799130017db3ee2", "reply_count": 42, "vote_count": 1, "bowl_id": "552d1d24dc1c586b09d2d051", "bowl_name": "Consulting" }

Recent grad: would you prioritize money to pay down a $45K student loan debt or maxing out 401K at 6%?

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401k. The match is free money

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likehelpful

Homo economicus says 401k first due to compounding

likefunny

@OP at those high rates, your priority should be 401K to company match then pay off that 12% then pay off the 9%.

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Kill the loan

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401k as long as your student loan interest rates are at a lower rate.

likehelpful

What’s the rate of the loan? Mine is 3.5%, so I’ll just delay that

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Depends on your loan interest rate

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Take the full match. After that pay off the loan. The ROTH IRA up to Max 6k/year (or backdoor if needed). Then max out 401k to 19k/year. Make sure your traditional IRA balance = 0. Plan to make enough money where you won't be eligible for traditional IRA deductions, or Roth contribution, therefore need to do backdoor. This is all assuming you have no CC debt, and sufficient emergency fund.

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D2: wish I could spend less EY doesn’t give time that much money to work with

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Op you should try to refinance. That’s a very high interest rate! I have 80k in loans and got 4.75% from Sofi and I’ve seen better than that

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IBM1: yeah, Sallie Mae.

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With an interest rate averaging 11%, I gotta double down on paying off the loan. Might do better on the matched money in the 401(k) but that’s money you can’t touch for 35 years (assuming truly recent grad) without penalty. I’d rather pay myself the 11% interest to pay off that debt as fast as possible and then enjoy the amazing wonder of compound interest without an 11% offset from Sallie Mae.

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IBM1: I looked into personal loans and all the interest rates were about 10% or higher. Didn’t make sense to me. Followed up on SC1’s advice and looked around at refinancing found SoFi was at 4.22% and reduces my payment term from 10 years to 5 which is awesome

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Pay off debt first.

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Both. Especially when younger given how interest works (both 401k and student loans) Cut down on outside spending and find frugal ways to have fun.

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First is just go up to company match offer. Second is take full advantage of the amount that is allowed by IRS tax purposes.

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One student loan is at 12% the other is at 9.8%

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@BCG1 - do the match. Damn, either you’re making a shit ton or BCG matches more than 6-7%

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I owe $3300 left in loans (originally $55k, I am now 25 years old). The interest is 3.15% and 3.61%, should I just pay them off fully now ? Or wait until May when they will be paid off through minimum payments.

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