I was going to post this in the Podcast ideas thread, then I thought I'd ask it as a separate thread and hear from other people too.
A little background, then a question:
Finishing my first year as EM attending. I've got $430K in student loans. I've refinanced them (now all less then 5% interest). I recently read a post on StudentLoanHero which discussed investing vs applying extra principle. In all honesty (& realistically), it's going to take me longer than 5 years to pay them off completely. Yeah, yeah, I'm sure a bunch of people would tell me to get gazelle intense, rice and beans, yada yada yada. The wife and kids aren't on board with that completely. Costs are realistically down as far as they are going for the time being. I know, I know. No need to badger me about this... Really, I know.
I recently read a post by StudentLoanHero about investing versus paying down principle. It got me thinking. Average student loans are at 4.4% interest with all of them less than 5%.
So, I'm contemplating opening a taxable account that is only earmarked for student loans. I pay minimums on the loans. Any extra money, I'll put in an aggressive fund like index small value growth or something. I have a stable job so at the worst, I will keep making the minimum payments. But, the second that account is big enough to pay taxes on growth and pay off student loans, I'll drain it and pay them off. I know that is leveraging and frowned upon by Dave Ramsey. What does WCI think?
I think I can tolerate the risk. Obviously, I wouldn't touch that money during a bear market because it couldn't pay off the balance. If I have to sit on it for an extra year or two, I guess I'd just be out the extra minimum payments it takes for the market to return. On the other hand, I would be able to keep buying when low.
Is this a really bad idea? Or a decent one as long as my financial situation can tolerate the risk? Am I just scheming and scamming myself? Thanks in advance for any thoughts.
Maybe this would be a decent topic for a blog post or podcast episode...
A little background, then a question:
Finishing my first year as EM attending. I've got $430K in student loans. I've refinanced them (now all less then 5% interest). I recently read a post on StudentLoanHero which discussed investing vs applying extra principle. In all honesty (& realistically), it's going to take me longer than 5 years to pay them off completely. Yeah, yeah, I'm sure a bunch of people would tell me to get gazelle intense, rice and beans, yada yada yada. The wife and kids aren't on board with that completely. Costs are realistically down as far as they are going for the time being. I know, I know. No need to badger me about this... Really, I know.
I recently read a post by StudentLoanHero about investing versus paying down principle. It got me thinking. Average student loans are at 4.4% interest with all of them less than 5%.
So, I'm contemplating opening a taxable account that is only earmarked for student loans. I pay minimums on the loans. Any extra money, I'll put in an aggressive fund like index small value growth or something. I have a stable job so at the worst, I will keep making the minimum payments. But, the second that account is big enough to pay taxes on growth and pay off student loans, I'll drain it and pay them off. I know that is leveraging and frowned upon by Dave Ramsey. What does WCI think?
I think I can tolerate the risk. Obviously, I wouldn't touch that money during a bear market because it couldn't pay off the balance. If I have to sit on it for an extra year or two, I guess I'd just be out the extra minimum payments it takes for the market to return. On the other hand, I would be able to keep buying when low.
Is this a really bad idea? Or a decent one as long as my financial situation can tolerate the risk? Am I just scheming and scamming myself? Thanks in advance for any thoughts.
Maybe this would be a decent topic for a blog post or podcast episode...
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