mickey3375
New member
Hi all,
So I recently got my bonus and have an opportunity to pay off a couple things. I bought a car around two years ago at a rate of 4.99% and also just had student loan re-payments restart.
Background: I am a 25yo living in a MCOL-HCOL area in New England. I make around 100k before bonus and other incentives. I have no immediate health issues and have a 3-month savings account in case I lose my job. I also put away 7% of bi-weekly checks in my 401k, 25% to investment/savings, and 25% to my family. The rest I use on rent (~1k), car payment, loan payments, etc. I have a roommate and live modestly. I have no issues making monthly payments, just want to be smart with my money. I have no other loans/credit card debt.
Situation: 2 loans I can pay off right now...
(1) Currently, I have a 15.5k quote to pay off the remainder on my car (I've already contributed 9k) to date. My monthly payments on the car are around $450. This pay-off would make my total interest over the sticker price around 1k-1.5k.
(2) I also have student loans remaining of 27k. I went through and have two options, pay ~$500 a month and pay off the loan in a few years or pay 250/month and pay off many more years. The breakdown of the loans are below (rounded). The subsidized loans have a lower blended rate (3.9) from my car than the unsubsidized loans which have a 4.5%.
Subsidized Loans Amount Rate
Totals/Blended Rate $17,000 3.93%
Un-Subsidized Loans Amount Rate
Totals/Blended Rate $9,600 4.46%
Conclusion: Right now I see 3 options
Option A) Pay off my car entirely (15.5k) and sink the rest into a Roth (which I have not yet maxed out for 23 and 24) and/or invest privately.
Option B) Pay off the un-subsidized loans (9.5k) so I stop accruing interest, save the rest, and pay off the subsidized loans monthly.
Option C) Make monthly payments on both and invest on my own. My average return for the last 3 years is just over 11% YoY, so honestly I am not the best as I work a ton and don't have much time to research. This would also be more headache to a pretty-demanding job.
Summary: Which is the best option, or is there an option D? I don't really want to pay off the entire student loan as that would use my whole bonus and I would have to dip into my savings accounts, where I don't really want to go below my 3-month expenses I have for emergencies.
So I recently got my bonus and have an opportunity to pay off a couple things. I bought a car around two years ago at a rate of 4.99% and also just had student loan re-payments restart.
Background: I am a 25yo living in a MCOL-HCOL area in New England. I make around 100k before bonus and other incentives. I have no immediate health issues and have a 3-month savings account in case I lose my job. I also put away 7% of bi-weekly checks in my 401k, 25% to investment/savings, and 25% to my family. The rest I use on rent (~1k), car payment, loan payments, etc. I have a roommate and live modestly. I have no issues making monthly payments, just want to be smart with my money. I have no other loans/credit card debt.
Situation: 2 loans I can pay off right now...
(1) Currently, I have a 15.5k quote to pay off the remainder on my car (I've already contributed 9k) to date. My monthly payments on the car are around $450. This pay-off would make my total interest over the sticker price around 1k-1.5k.
(2) I also have student loans remaining of 27k. I went through and have two options, pay ~$500 a month and pay off the loan in a few years or pay 250/month and pay off many more years. The breakdown of the loans are below (rounded). The subsidized loans have a lower blended rate (3.9) from my car than the unsubsidized loans which have a 4.5%.
Subsidized Loans Amount Rate
Code:
$6,100 4.45%
$5,500 4.53%
$5,500 2.75%Totals/Blended Rate $17,000 3.93%
Un-Subsidized Loans Amount Rate
Code:
$4,500 5.05%
$1,100 5.05%
$2,000 4.53%
$2,000 2.75%Totals/Blended Rate $9,600 4.46%
Conclusion: Right now I see 3 options
Option A) Pay off my car entirely (15.5k) and sink the rest into a Roth (which I have not yet maxed out for 23 and 24) and/or invest privately.
Option B) Pay off the un-subsidized loans (9.5k) so I stop accruing interest, save the rest, and pay off the subsidized loans monthly.
Option C) Make monthly payments on both and invest on my own. My average return for the last 3 years is just over 11% YoY, so honestly I am not the best as I work a ton and don't have much time to research. This would also be more headache to a pretty-demanding job.
Summary: Which is the best option, or is there an option D? I don't really want to pay off the entire student loan as that would use my whole bonus and I would have to dip into my savings accounts, where I don't really want to go below my 3-month expenses I have for emergencies.