Roth or Student Loans?

**Anastasis** · 10-02-2011, 12:39 PM

I had a question I think I know the answer too but I'd like to hear other people's thoughts:

You can see the info on my debt snowball below. I make about $46k a year and I will for about 2.5 more years, then I'll go up to $300-350k per year (most likely). Which means the next couple of years are the only time I'll be able to contribute to a Roth IRA. Looking at my budget I should be able to make the min on my student loans and put a little away into a Roth (I wouldn't even consider funding the Roth until the last CC debt is out of the way).

So my question is: should I keep tackling my HUGE student loan debt or do min payments on the student loan and contribute to my Roth IRA while I can knowing I should be able to get rid of the student loan debt in less than a year once my income bumps?

I'm leaning towards just chipping away at what I can on the student loans.

**melodys** · 10-02-2011, 05:09 PM

Do you have an emergency fund? Before you pay into an IRA or pay off student loans you need to have some cash socked away in a safe place just in case.

Beyond that a financial adviser is probably needed for guidance in your specific, and fairly uncommon, scenario. There are tax implications to either choice that should be considered.

**Anastasis** · 10-02-2011, 05:47 PM

I have $1200 in an emergency fund.

I bring home about $2680/month and I have about $800/mon in my budget that is going towards paying off the credit card debt. In December my $380 IBR student loan payment kicks in. I'll need a few more months to finishing paying off the credit card but afterwards I'll have $420 that can go to:
1. Paying down student loans or
2. Building up a bigger emergency fund or
3. Funding a Roth IRA.

Now that I type that out I'm leaning towards finishing up 3 months of an emergency fund then try to chip away at the student loan debt.

**Nishu** · 10-02-2011, 07:14 PM

Originally Posted by Anastasis

Now that I type that out I'm leaning towards finishing up 3 months of an emergency fund then try to chip away at the student loan debt.

I'd probably do that. I don't think I have the brain power to figure out the tax implications of a roth vs the student loans, but I'm not sure it would matter too terribly much with that amount of income.

Btw if you don't mind me asking, what are you going to be doing that'll be draggin in 350 a year?

**Anastasis** · 10-03-2011, 05:08 AM

Originally Posted by Nishu

Btw if you don't mind me asking, what are you going to be doing that'll be draggin in 350 a year?

I'm a doc - I'm finishing up my residency training in emergency medicine. They don't make that much everywhere but I'm lucky that I want to practice in one of the more lucrative parts of the country (which is more lucrative because it's hard to recruit docs to practice there).

**Early Bird** · 10-03-2011, 10:56 AM

I'd say the Roth. After all, no one will give you a loan to support your retirement.

**Greebo** · 10-03-2011, 11:12 AM

Has your other debt been eliminated? If S/L debt is all that's left and you're looking at significantly more than 2 years to get out of BS2, then deferring that really huge debt in order to get your FFEF in place and your retirement investing started ends up being the smart thing to do.