Is my strategy wrong?

[jd2005]

So I just got berated on NetworthIQ for suggesting to someone that they should consider the fixed interest rate of their student loans when making the decision to pay the off early.

75% of my SL debt is fixed at 1.625%...why in the hell would I want to pay that off early?!? I am using my extra $ to either pay down other higher interest debt, or invest (since I am positive I can get a return greater than 1.625%).

Am I wrong in my thinking?

[Deleted]

nope

[Deleted]

1.625%!!!!!


I would not be looking to pay that off early.

Wowzer!

[pig]

Eh did you take out your loans in the 1930's? That's super low.

[haapai]

Your strategy might be right for you but not for others.

If you were talking to a recent graduate with 6.8% unsubsidized Staffords or graduate school loans at the same rate, you might just have been bragging about your incredibly low rate.

[jd2005]

Took out the loans in 2002-05. Consolidated in 2005. Then, because I do automatic electronic payments my lender knocked off another .25%. And, after 4 years of on-time payments (which I cannot help but do since they automatically withdraw from my account) I got an entire 1% knocked off.

It costs my lender more $ to service the debt than what I'm paying for it! ;D

[Clever Username]

Goals: Debt Free. Build net worth.
Put these two goals in order and I'll tell you which you should do.
People get their panties in a bunch all the time defending their goal priorities.
I bet you can find much more frivolous things both on both sides of the conversation that impact your net worth more than this.

[dianartemis]

I think it's cashflow vs networth and many people seem to see cashflow = networth

[jd2005]

May 5, 2011 13:42:13 GMT -5 haapai said:

Your strategy might be right for you but not for others.

If you were talking to a recent graduate with 6.8% unsubsidized Staffords or graduate school loans at the same rate, you might just have been bragging about your incredibly low rate.

Always happy to brag about a 1.625% rate...but not this time. I was surfing around looking at other legal professionals, and saw this particular individual who was in my age/salary group. I asked the question of this person simply because it looked like they graduated at a time close to mine (so should theoretically have access to equally low rates), and wanted to know if there was something new out there regarding paying of SL early...and then I got blasted by another poster! Ugh!

[Tiny]

It may also be having had "debt of any kind is BAD!!" drilled into their heads. Which leads them to think that debt must be paid off as quickly as possible or simply NOT taken on in the first place. It can also limit their 'vision' of the Big Picture (ie struggling to pay off low interest debt and then needing to borrow money at a higher interest rate ).
It can be very difficult to overcome the "All Debt is BAD!" kind of thinking.

[stats45]

There are a lot of 'Dave Ramsey' people who get 'avoid debt at all costs' pushed into their heads. For some of these people, it is like they had a spending/debt addiction and they need to talk like this to avoid relapse.

[haapai]

Perhaps the person that you were talking to really hated being a lawyer but had to stay one because it was the only way to service their student loans. They did list going to law school as their worst financial decision.

There's always been a subset of lawyers who hate being lawyers or hate the type of law that they are practicing. It can't be good for the profession.