3 Reasons to Pay You Student Loans Slowly
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.