What would you do?

**Telephus44** · 09-29-2007, 10:16 PM

Here's what I'm pondering...

Right now I have about $4500 in savings. This account and idea is a leftover from before I got married, and I've always called it my Sportscar fund - so I'll be able to buy a Honda S2000 convertible someday. Realistically, with a young child - I'll need to be in a midlife crisis before I'll get my sports car (which I am ok with) but what to do with the $$ has crossed my mind.

We already have a $10,000 EF - so it's not like I need to keep it in savings. What I've been pondering is:

1. Use it for my 2007 Roth IRA contribution
2. Use it to entirely pay off my student loans

1. Pros and Cons - Pros - I'll get the money in sooner and working for me, and we won't have to scramble to find the $$ at the end of tax season. We'll collectively be able to sock away more money towards a house. Cons - we would put the contribution in anyways in April using other money.
2. Pros and Cons - Pros - No more debt! No more interest! This will free up $250 a month in our budget Cons - this is good debt at a really low interest rate - 3.75% - we only pay $18-$22 a month in interest anyways. And we get a tax deduction for the interest. We would have this paid off in Dec. 08 on our current schedule.

So - DH and I were talking about this last night - I'm leaning towards #1, and he's leaning towards #2. I'd appreciate any thoughts/inputs.

As a side note - we run a "his, hers, and ours" money system - and right now my student loans and my ROTH are being funded out of "ours" and this money is "hers" - although I can't help feeling that since the student loans are mine, that I ought to contribute more towards them. The ROTH is mine with DH as a beneficiary, although we collectively consider it our retirement.

**Jaded** · 09-29-2007, 10:20 PM

I'd pay off the student loan, but that's just me. I can't stand being in debt.

**PrairieRose** · 09-29-2007, 10:58 PM

I echo paying off the student loan. Not owing anybody anything would be worth more to me than have the extra money. Since you will have the money for the taxes I think you should pay the student loans....jmho since you asked

. Either way you're doing a very good thing.

**Ani** · 09-29-2007, 11:16 PM

I would definitely pay off the student loans. You're really smart, and I know you have everything worked out logically and mathematically, but the factor of risk is something to consider as well. Being in debt to no one lowers your risk level exponentially. Even it's it's only $20 a month you're paying in interest...that's still $20 a month you're paying in interest! It's not going to ANYTHING. It does you no good.

I completely understand the idea of funding your ROTH with it...but if I was you the student loan would be gone tomorrow.

**McD** · 09-29-2007, 11:18 PM

I'd pay the loans off.

**nuisance26** · 09-30-2007, 07:54 AM

~I'd pay off the loan too. Then just save the $250 you were paying to it to contribute to your Roth.~

**Marie78** · 09-30-2007, 08:53 AM

I would pay off the student loans too. I just paid off mine, I only had less than $200 left on it though, so mine wasn't as big a chunk as almost $5,000. It felt so good to mail that bill out last night

. If there will be other money to cover the Roth IRA Contribution by tax time, I would throw it at the student loan (if it were me).