I’ve decided to pay off my student loans slowly. Sure, I can pay more and knock it out within a few years. BUT I need to build my nest egg and emergency fund man! Here are my reasons for paying off student loans slowly:

1. The interest is super low. I am not going to find a loan with lower interest rate. Mathematically, it makes more sense to pay off the student loan monthly minimum and put any extra money toward a higher yielding account such as an IRA. For the conservative, the money market also generates higher interest than a student loan.

2. You can write it off your taxes. This might not matter for me since the standard deduction is usually more than enough. For a majority of people, you can deduct student loan interest from your taxes. The maximum you can deduct is $2,500. There are also certain salary restrictions. Visit the IRS (hooray!) for more details.

3. Building wealth is more fun. How fun would it be to look at your student loan balance and bank account at $0. Boring! I would rather see a student loan of $50,000 and a bank account with $50,000. In my eyes, the $50,000 in a bank account feels a lot better. Plus, you have a nice little emergency fund that you wouldn’t have if you paid off your debt immediately.…

Energy Star has a little chart that shows how replacing the standard equipment in the house can save you money in the long run. It shows you the extra cost, the annual savings, and for the impatient, the payback period.

The 6 upgrades are:

1. Get a programmable thermostat.
2. Replace your incandescent bulbs with compact florescent light bulbs.
3. Upgrade to a more energy efficient furnace.
4. Replace your laundry machines with the low water/low power machines.
5. Get windows that keep the heat (or cold) in your house.
6. Get an energy efficient central air conditioning unit.

You should definitely start with the top 2 (Getting a programmable thermostat and replacing your light bulbs). It will only cost 70 bucks and your extra cost will be paid back within 7 months. The savings for upgrading your furnace are pretty good. It saves you $400 a year.

A surprise was the windows. I was under the impression that closing up leaks in the house was the best way to save tons of money on your energy bills. The cost to savings ratio of new windows isn’t worth it to me. I’d rather put wax paper over my windows. And the bonus of using wax paper? Your neighbors won’t be able to see you.

Upgrading your central air conditioner unit to save $35 is also not worth it unless you plan to live in the house for a very long time. Here’s the chart from Energy Star.
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