Money Matters
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Paying off Debt questions

Looking for opinions. Here is the scenario.

I just got married, and my now wife has student loan debt. I have never been in debt, and it bothers me when I owe someone money. I make good money, but I just bought a house so right now all I have saved is for emergency purposes only. Should I take out of my investments to pay off her debt, or just plug away and pay it off over the next year.

I'm leaning toward just paying it off over the next year, but the allure of not owning anyone is very enticing to just pay it off using some of my investment money.

Thoughts? and TIA..

Re: Paying off Debt questions

  • First I would find out how much, if any, capital gains tax you might have to pay if you liquidate your investments. If they've appreciated and you have to pay (although I think capital gains is still 15%, but I'm not positive) you might be better off to pay the student loan interest over the course of a year.
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  • I would personally just pay it off within the next year. I would never want to touch my investments. That's money lost that I could use towards my retirement. 

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  • I can withdraw from my contributions without penalty.

  • I wouldn't touch what you have saved.  I would just work on paying it off as time goes on.  
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  • Yep, that was the direction I was leaning. Just wanted to see if anyone had a great reason to use some of my investment and just pay it off.


    Thanks for the answers.

  • Definitely don't pull from your investments, it isn't worth it.

    Sit down and put together a written monthly budget (with your money jointly) and see how much you can put toward the debt each month with your combined incomes.  You may be surprised as to how quickly it can be gone.

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  • Don't pull from your investments, just pay it off. A year really isn't that long, and while I understand wanting to be debt free, it's not worth the lost growth on your investments. One suggestion if you do want to speed things up would be to pause your contributions to retirement until it's paid, but with it only beig a year I'm not sure I would even do that.
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