What should I pay off first

[banon6983]

@nothinges The S&P 500 Dividend rate is about 1.5% the rest is long term market growth (long term capital gains), assuming that portion of the 8% (18.75%) is now taxed at 22% federal and the same 5% state tax, now the market yield is 6.295%.

We went from 6.4% to 6.295%, still doesn't make sense to pay any of this guys loans early.

 

[nothinges]

@banon6983 You're looking at very looonnnng time horizons.

From 2000-2013, the S&P 500 had 0% real returns. If you timed the market, you could've made money if you withdrew in 2007, although it'd barely beat inflation.

For this reason, it's always prudent to pay off loans. You're getting the equivalent of a long-term treasury paying 4-4.5%.

 

[banon6983]

@nothinges Yes, I am looking at long term time horizons. I can counter your argument by simply giving an example following yours of 2014 to now. But we both know that nothing is going to give a better estimate of the future than a dataset that includes as much time as possible. i.e. that "very looonnnng time horizon"

P.S. Also, not that it changes anything but I did think was interesting, if you DCA'ed during your exampled time period the real return (after inflation) would be 2.41% instead of the lump sump value of 1.46%. DCAing increases the yield another 0.95%.

 

[fhim]

@cbrooks624 6 year contract? Is that common now?

As someone who is about to get out, my advice is also to put as much as you can toward your TSP. It takes a few years to grow, but 8 years later and I am comfortable getting out without feeling like I have to stay in for the retirement.

 

[rooneysoccer]

@cbrooks624 If you are deploying soon, you can defer your loans without accrue interest for the time of deployment and deferrement up to a year.

 

[mwangi22]

@cbrooks624 Why do you owe so much on a 7 year old car with so much mileage?
But I’d tackle student loans, car, CSL. Shit if your real desperate sell that Roth IRA and that will give you a big heads start.

 

[blizzardwild]

@cbrooks624 The student loans have the highest rate, so my initial thought would be to tackle that first. However, if you're confident you'll stick around for 10 years and qualify for the PSLF then I'd just make the minimum payments for now.

Additionally, as others mentioned, I'd probably at least pay the CRV down in case something happens to it. It's a Honda with under 100K miles so it should be good and reliable, but I'd get out from under that large of a balance just in case.

And with current interest rates, I'd probably prioritize savings over paying those other things down. Even HYSA has higher interest rates right now, so I would park some in that and then focus on other long-term savings. Just make sure you earmark some of that to pay off some of those other debts so you don't somehow get behind on the career starter loan and/or student loans.

 

[insertusernamehere]

@cbrooks624 If the student loans are subsidized, you can put them on military deferment and it will be 0 percent interest... May make the choosing equation better.

If some portion is Stafford subsidized and some not, be sure to pay off the no subsidized first... Oh, and put them all on deferment anyways... No point not to.

Hope that helps! Good luck!