POLL: Pay Off Private Student Loans or Save Up for a Home? (Poll Closes 05/15/2007)

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NEVER HAVE DEBT.
when you apply for a mortgage they're going to take those loans into account, big time, because it amplifies credit risk. Which is a big deal right now to begin with. Trying to do both is probably going to cost more in the long run than paying off the debt now.

― TOMBOT, Monday, 7 May 2007 21:40 (sixteen years ago) link

and by "both" I mean anything (besides maybe investing some while paying off the loans) that includes trying to buy home while still having loan debt.

― TOMBOT, Monday, 7 May 2007 21:41 (sixteen years ago) link

ok I reread and you were pretty clear abt what it would take just to get rid of the private loans, sorry. another thing to consider: are you already at your max deduction for student loan interest debt (probably) and how would that change the numbers?

― teeny, Monday, 7 May 2007 21:42 (sixteen years ago) link

ok regarding what tombot said you might want to talk with a mortgage dude and see how different scenarios play out too, and see what he thinks mortgages will be like in a few years. I mean loans do amplify credit risk but it's not an either/or situation, you could get a good mortgage while still having lots of student loans, depending on your income and amt of mortgage.

― teeny, Monday, 7 May 2007 21:48 (sixteen years ago) link

teeny: i have actually run the numbers doing a scenario similar to what you have described (not using an index fund, but using a VERY good moderate/conservative balanced fund). i have to admit that it IS tempting, particularly if (as i alluded to above) i end up moving back to the philadelphia metro area or the lehigh valley, PA (where the pertinent amount can STILL get some nice property -- the recent infestation of new yorkers and new jerseyans looking for "bargains" notwithstanding) as opposed to the onetime-crackhouse-walkup-in-the-hood-converted-to-"luxury condos" shit that the same money would buy in the NYC metro area.

still, i think that TOMBOT is 100% OTM here -- which is why i'm leaning towards just paying the private loans off altogether. and since i'm not yet married and have no kids, i'm cool with renting.

― Eisbaer, Monday, 7 May 2007 21:50 (sixteen years ago) link

Homebuying is overrated, imho

― Hurting 2, Tuesday, 8 May 2007 01:36 (sixteen years ago) link

Now you tell me.

― Rock Hardy, Tuesday, 8 May 2007 01:42 (sixteen years ago) link

Pay the loans off. After paying them off in two years, you can save up for a couple of years and perhaps by then home prices will have reached sane levels again. But just so long as you aren't doing it because you think a home is a good investment. While it is nice to have equity, most people (depending on how much you put down, etc.) are losing money for the first several years of home ownership--minus the tax shelter aspect.

Speaking of tax breaks, when did they change the tax law so that if you make > than X amount of money (I think like $45-50K), you don't get the student loan interest tax break? Bitches.

Enjoy the ride downhill: http://money.cnn.com/2007/04/09/real_estate/shiller.moneymag/index.htm

― Bill in Chicago, Tuesday, 8 May 2007 02:50 (sixteen years ago) link

always pay off debt when you can. ALWAYS.

― Oilyrags, Tuesday, 8 May 2007 02:51 (sixteen years ago) link

ILX AGREES: DEBT SUCKS

― David R., Tuesday, 8 May 2007 02:53 (sixteen years ago) link

LOANS LOANS LOANS

― 696, Friday, 11 May 2007 10:40 (sixteen years ago) link

Oh: I didn't read this properly before voting - a private higher interest loan, yes pay off :( Low interest government issued student loan = not worth it. I've only got one credit card to pay off and am "quietly confident" I can do this soon - I paid off about half the balance, but then oops! bought a laptop! But I can't think of any other high value purchases I'd need to make on it in the next couple of years so by then hopefully it will be all nicely paid off and then the cash from those payments can go nicely into an ISA or what have you (if I can put that much money in an ISA that is, my payments are [voluntarily] really quite high).

― Sarah, Friday, 11 May 2007 10:46 (sixteen years ago) link

Short answer, loans.
Long answer, in fact this is a simple math question really: How can you "make" more off each marginal dollar? Compare the interest rate on the loan you would pay down vs. the capital appreciation on the home you would invest in. Virtually all of the time, you will benefit more from paying down the loan. (The math is oversimplified, but I don't think that voids it as a rule of thumb.)

― mitya, Friday, 11 May 2007 11:40 (sixteen years ago) link

thanks for the input -- esp. since it confirms what i was gonna do anyway.

― Eisbaer, Tuesday, 15 May 2007 00:27 (sixteen years ago) link

confirmation_bias_lolcat.gif.

― remy bean, Tuesday, 15 May 2007 01:42 (sixteen years ago) link

I felt unable to vote in this poll, as "invest in bale of Cocaine" was not an option.

― John Justen, Tuesday, 15 May 2007 01:45 (sixteen years ago) link

haha, "invest in weed/crack-selling ice cream truck" wasn't an option either -- and perhaps it should've been.

― Eisbaer, Tuesday, 15 May 2007 01:46 (sixteen years ago) link

http://www.bobsandersonentertainments.co.uk/live_the_dream.gif

― John Justen, Tuesday, 15 May 2007 01:48 (sixteen years ago) link

Watch these rap niggaz get all up in your guts
French-vanilla, butter-pecan, chocolate-deluxe
Even caramel sundaes is gettin touched
And scooped in my ice cream truck, Wu tears it up
(The ice cream man is coming!)

― Eisbaer, Tuesday, 15 May 2007 01:50 (sixteen years ago) link

eight years pass...

Rate of interest on student loans in the UK (1.5%) is now higher than most saving accounts so i paid mine off today.

― Petite Lamela (ShariVari), Friday, 22 May 2015 07:35 (eight years ago) link

congrats!

― brimstead, Friday, 22 May 2015 07:44 (eight years ago) link

ty!

― Petite Lamela (ShariVari), Friday, 22 May 2015 07:54 (eight years ago) link

Getting unencumbered of debt is generally the way to go every time.

― Aimless, Friday, 22 May 2015 16:48 (eight years ago) link

Well done! If I wasn't on standard maternity pay I'd do likewise

― kinder, Friday, 22 May 2015 17:38 (eight years ago) link

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