Should I pay down my mortgage, student loans, or put more in savings?

Should I pay down my mortgage, student loans, or put more in savings?
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#1

I am an unmarried 25 year old that makes $65K a year and will receive a financial gift of $15K this year. I have no credit card debt, $29K in student loans (I pay an extra $100/mo on these), I max out my IRA, match my 401K at work, and recently bought a house through an FHA new home buyer program. I am diligent with savings and have a 2.5 month emergency fund that I add to every month.

I want to put $10K on the principal of my second mortgage of $50K at 5.25%, $5K towards my largest federal loan that’s currently $5.9K at 6.55%, and pay off two of my smallest federal loans that total to $3.5K that are both 6.55% by the end of the year but I know that I should have at least a 6 month emergency fund and would love to have at least $20K in savings.

Should I use the $15K to max out my emergency savings or should I slowly grow my emergency fund and pay down debts?


#2

Since you have no credit card debt, you could actually pay off the largest federal loan, and put the balance of $9k in savings. Then, you can continue to accelerate the payments on the smaller loans totaling $3.5k and pay them off by the end of the year.
Once the above loans are paid in full, the monies that you were paying on them can be applied toward your mortgage. Visit Powerpay.org to strategically pay off debt. I hope that this helps!


#3

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