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Generally, in order of priority, you should (1) pay off any high interest (eg credit card) debt; (2) remain current on low interest debt; (3) build an emergency fund of at least 6 months total expenses (a CD ladder is good for this); (4) max out tax deferred opportunities like 401k; and then (5) invest remaining free cash flow in a diversified portfolio consisting of ETFs or index funds, which for a young person should be weighted heavily towards equity. Invest that way every month, don’t watch the markets, and live below your means.
This is all really helpful, thank you so much. I’ve been diligent about having no CC debt, living in my means and putting all extra money into paying off the debt as much as possible because (like A2 said) I hate feeling like I owe so much, or that I’m chained to debt. I have always wondered though if it really is most advantageous to put that extra cash into investments rather than the random chipping away at my debt...
If you have federal loans, I'd make big payments on those loans right now.
I paid the minimum and invested in Real Estate. I have like five houses as a fifth year associate. It’s been good and bad and I learned a lot of lessons. Not so sure I wouldn’t have been better off with paying off loans and then investing in a 401k.
Some specifics: $150k in student loans at 2.8% over 7 years; $220k/year salary; max 401(k) (Roth) contributions.
Are your loans public or private?
Private, I refinanced last year because my federal loans had insanely high interest rates.