TweetEmailFinally reaching the point where you have positive cash flow to be able to choose to pay off your debt or invest is never a bad thing. When you’re dealing with a very low APR, for example, student loan debt of 2-3%, the answer is also pretty simple. Until those two things are started up and growing through interest and automatic deductions, pay only the minimum on student loans.
However, if the option to put money into a 401(k) where there is an employee match, they may want to use enough money to get the maximum match, and then continue to use the rest to pay off the loans. It would be good to know if their employer offers matching funds for a 401k…if so, that may sway the equation. Assuming you have an emergency fund of 3-6 months(average unemployed worker is out for 3 months right now according to BLS), my recommendation would be, pay off the debt first. This is because vehicles are one of the worst things to finance and having $18,000 in 3 years to put towards a new vehicle will save thousands compared to financing the vehicle.
Almost forgot, if you have good credit and are responsible with credit cards, see if you can get a 0% credit card for 12 months, and pay off a large chunk of the debt up front.


I would save for an emergency fund first, then put all you can towards paying off the student loan, especially if you are still in your late twenties. Most of my colleagues do not pay down debt at all during residency (or pay just the interest to prevent capitalization). Pay down your debt as soon as possible and then ramp up your investments later down the line.
We really want to start a family, but I am not willing to do so until we pay down all of our loans and can survive off my military income(in case we decide she is going to stay at home). Whether you create an aggressive or moderate allocation toward your debt payoff, you will have to change it after some time.
As time moved toward the date that I would payoff my last credit card, I changed my allocation to push more money into my savings account than towards my debt. Determine how much of your remaining funds you can afford to put toward your loans, presuming that you can afford to pay more than the minimum. I would hate to see them payoff the loan only to have to run up CC debt in case of an emergency.


You may not see either number change by leaps and bounds, but paying off your debt and contributing to a retirement account are both great ways to better your future.
Our emergency fund was just depleted due to a break in between jobs, buying expensive plane tickets back to the States and having one month off in August (to return to the States to get married). I’m with Justin, above, that if your employer offers 401(k) matching, Lisa needs to take advantage of that. All this has left us without much savings, but we are dedicated savers and are very good at sticking to a budget.



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