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What would the MT board do ? Regarding condo sale and student loan balance
Posted on 2/7/24 at 11:11 am
Posted on 2/7/24 at 11:11 am
I am in the process of selling my condo.. it’s under contract . I’ll make about $160,000 when it’s all said and done on the sale
I have about $127,000 left in student loans at 4.24% refinanced privately and that was the reason I decided to cash out on my condo hopefully at a high point in the market .
That payment for the SL is $2,000 a month.
-I already have an apartment lined up and it’s payment is $2,000 per month .
I bring home around $8,000 a month and have no debt aside from the student loans
I’m in my mid 30’s and have about $80,000 in a 401k contributing 5% monthly with no employer match
Now the real question. And this is the part I’d like some feedback on…. Is how would you tackle this student loan debt?
Some options I have are 1) make one huge payment and get rid of it entirely
2) chase is offering 5% 2 month CD’s and I was thinking of putting it all on there and using all that after tax interest earned from the CD and dump it into my student loan payments every 2 months when it matures .
Continue making my regular monthly payments with chunk payments interested in all while renewing the full balance of the CD’s and just using the interest earned to really work on the student loans balance that way
3) I’m willing to listen to other suggestions as finance and money just are not something I know anything about
Thank you for your time .
I have about $127,000 left in student loans at 4.24% refinanced privately and that was the reason I decided to cash out on my condo hopefully at a high point in the market .
That payment for the SL is $2,000 a month.
-I already have an apartment lined up and it’s payment is $2,000 per month .
I bring home around $8,000 a month and have no debt aside from the student loans
I’m in my mid 30’s and have about $80,000 in a 401k contributing 5% monthly with no employer match
Now the real question. And this is the part I’d like some feedback on…. Is how would you tackle this student loan debt?
Some options I have are 1) make one huge payment and get rid of it entirely
2) chase is offering 5% 2 month CD’s and I was thinking of putting it all on there and using all that after tax interest earned from the CD and dump it into my student loan payments every 2 months when it matures .
Continue making my regular monthly payments with chunk payments interested in all while renewing the full balance of the CD’s and just using the interest earned to really work on the student loans balance that way
3) I’m willing to listen to other suggestions as finance and money just are not something I know anything about
Thank you for your time .
5
Posted on 2/7/24 at 12:05 pm to Lawyered
Pay half student loan debt (then get a lower monthly payment)
Pick a fair amount $25k for high yield savings (not CD) and keep for opportunity investing
Up your contribution to your 401k for tax savings
Open a SD Roth IRA
Pay down other debt if any
Invest in index and tech ETFs
Pick a fair amount $25k for high yield savings (not CD) and keep for opportunity investing
Up your contribution to your 401k for tax savings
Open a SD Roth IRA
Pay down other debt if any
Invest in index and tech ETFs
This post was edited on 2/7/24 at 12:06 pm
Posted on 2/7/24 at 12:05 pm to Lawyered
I personally love option two. It allows for maximum usage of the money. Student loan interest being tax deductible also lowers the effective rate. If Chase interest can pay it off for you over time, I think that is great management! The effective rate is less than inflation so from a mathematical standpoint, it's the best. Paying it all off feels good emotionally and may be worth the stress to a lot of folks, but it is not normally the best route.
Posted on 2/7/24 at 12:14 pm to rpg37
quote:
Student loan interest being tax deductible also lowers the effective rate
I make too much to utilize this sadly
quote:
Paying it all off feels good emotionally and may be worth the stress to a lot of folks, but it is not normally the best route.
Right.. I would imagine so. I’ve been making the payments for years so I’m used to it … but it’s nice to know if I wanted to pay it all off , I could .
Posted on 2/7/24 at 12:23 pm to rpg37
quote:
Student loan interest being tax deductible also lowers the effective rate.
Nope, seems would phase out at his income level, gets no deduction.
My vote is to Pay it off and start investing that payment instead. You could make up that amount in less than 5 years investing.
The interest savings and peace of mind will be worth it… I’ll have paid 200k + off by this time next year at 6-7% loans. But it’s taken me 10 years and over 50k in interest. Can’t wait for that weight to fall off my shoulders.
You could put it in Jepq and get around 1600 a month in dividends but you’d have to pay taxes on that.
This post was edited on 2/7/24 at 12:37 pm
Posted on 2/7/24 at 12:35 pm to Lawyered
I wouldnt rush to pay off 4.24% loan.
I would use the proceeds to increase retirement contributions including maxing Roth IRAs. 5% contributions to 401k arent going to cut it especially given you're no longer accumulating home equity.
You could max IRAs for 2023&2024 and put remainder in HYSA. Increase 401k contributions and use the HYSA to offset reduced take home pay.
If HSA eligible max that first and get it invested for triple tax advantaged growth.
I would use the proceeds to increase retirement contributions including maxing Roth IRAs. 5% contributions to 401k arent going to cut it especially given you're no longer accumulating home equity.
You could max IRAs for 2023&2024 and put remainder in HYSA. Increase 401k contributions and use the HYSA to offset reduced take home pay.
If HSA eligible max that first and get it invested for triple tax advantaged growth.
Posted on 2/7/24 at 1:08 pm to TorchtheFlyingTiger
quote:
I wouldnt rush to pay off 4.24% loan.
This is where I am.
I would invest the proceeds from the sale.
That's a cheap rate in today's world.
I had a 2.2% student loan rate and I took every month they gave me to pay it off.
Posted on 2/7/24 at 1:14 pm to Lawyered
quote:Yep, do this. This debt will weigh you down forever. The delta from 4.24% vs 5% in CDs is beans. Pay the sucker off
1) make one huge payment and get rid of it entirely
Take $13.5K out of the ~$33K left from sale of condo and fund your '23 and '24 Roth ($6.5K for '23 and $7K for '24)
Put the remaining $19.5K in that CD or open a taxable brokerage account or boost your emergency savings or go on a kick arse vacation
Definitely up your 401K to 15%
Take what was the payment for you student loan and save it going forward to fund your Roth on Jan 1st '25, rinse and repeat going forward
Posted on 2/7/24 at 7:13 pm to Lawyered
I agree with all of this
But I would add to this a question about your long term housing plans. Having money in a personal residence gets you some diversity in your overall allocation of your net worth. If you own a home your housing costs are inflation protected (apart from property taxes maintenance and perhaps insurance) You lose that inflation protection as a renter and the long term appreciation.
Are you getting back into home ownership or are you going to rent long term / forever and be subject to rising housing costs that you are somewhat insulated from when you own a house with no mortgage or a fixed one you are paying down?
quote:
Yep, do this. This debt will weigh you down forever. The delta from 4.24% vs 5% in CDs is beans. Pay the sucker off
Take $13.5K out of the ~$33K left from sale of condo and fund your '23 and '24 Roth ($6.5K for '23 and $7K for '24)
Put the remaining $19.5K in that CD or open a taxable brokerage account or boost your emergency savings or go on a kick arse vacation
Definitely up your 401K to 15%
Take what was the payment for you student loan and save it going forward to fund your Roth on Jan 1st '25, rinse and repeat going forward
But I would add to this a question about your long term housing plans. Having money in a personal residence gets you some diversity in your overall allocation of your net worth. If you own a home your housing costs are inflation protected (apart from property taxes maintenance and perhaps insurance) You lose that inflation protection as a renter and the long term appreciation.
Are you getting back into home ownership or are you going to rent long term / forever and be subject to rising housing costs that you are somewhat insulated from when you own a house with no mortgage or a fixed one you are paying down?
This post was edited on 2/7/24 at 7:15 pm
Posted on 2/7/24 at 7:58 pm to agilitydawg
quote:
Are you getting back into home ownership or are you going to rent long term / forever and be subject to rising housing costs that you are somewhat insulated from when you own a house with no mortgage or a fixed one you are paying down?
That’s the plan. To save up a good bit and re-enter the housing market next year or 2026. Renting will not be a long term thing for me .
If Kiffin leaves us high and dry and football goes back to the mean, real estate values will drop. It’s almost directly tied to how the football team is doing here in Oxford .
Times are good and enthusiasm is high and that’s why I decided to sell now as I have maxed out its value for awhile in the sales prices.
This post was edited on 2/7/24 at 7:59 pm
Posted on 2/7/24 at 8:09 pm to Lawyered
Interest rates are leveling off. Housing costs aren’t coming down anytime soon.
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