Does it make sense for me to pay off my student loan early?

[mcfc57]

My situation:

25
Married
$12k emergency fund
$500 available for long-term savings each month (401k's funded separately)
$12k in 401k
$4k in wife's 401k

$10,187 student loan at 6.5%, $102 monthly payments
$4957 student loan at 6.8%, $61 monthly payments (wife's)
$10,000 student loan, unsure of rate but less than the other two, $115 monthly payments (wife's)

I had not payed attention for a while and was surprised to see the 6.5 and 6.8 rates. We are currently earning somewhere around 1.75% interest in an online savings account with our emergency fund.

Does it make sense in this situation to deplete some savings to pay off some/all of one/both of the student loans?

If we did, the extra money each month would go back to build the emergency fund although it would take some time. Other savings would be split between setting up Roth IRAs for us both and other long-term savings.

More info required?
Any other suggestions?

[Radiance]

12k, how many months of living does that five you?
I think 6.8 is not that high and I would like to have at least 3 months, preferable 6 months of living expenses in EF.

Can you cut on other expenses for some time to pay off faster?

[Broken Arrow]

Yeah... if your jobs are stable, I think it would be OK to, say, halt emergency funding and whatever else you can spare, without compromising your retirement contributions to pay down the debts. Barring the interest rate details of the $10k, you can tackle that $4957 and clear $61 off your monthly budget.

[Slug]

I think you need to open the Roth's and get a little money into them so you think of them in a more active way - like I should put a little $ in my Roth vs. I should take the time to open one. At the same time, attack the highest variable interest debt first I would think. But don't pay down savings to the point where you start to get anxious or lose sleep. It's a delicate balance but you're on the right path. I struggle with the exact same balance.

[sandrark]

Originally Posted by mcfc57

My situation:

25
Married
$12k emergency fund
$500 available for long-term savings each month (401k's funded separately)
$12k in 401k
$4k in wife's 401k

$10,187 student loan at 6.5%, $102 monthly payments
$4957 student loan at 6.8%, $61 monthly payments (wife's)
$10,000 student loan, unsure of rate but less than the other two, $115 monthly payments (wife's)

More info required?
Any other suggestions?

I would absolutely pay off the $5K student loan from your E-Fund.

Then I'd take $2187 from the E-Fund (leaving $5K) and pay it against the $10,187 loan. New balance: $8K.

Every two months, when your $500 each month adds up to $1K, I'd pay it against the remaining student loan balances. You'd have them ALL paid off in 18 months that way.

Sandi

[Alex_Adviser]

Yea, you could probably put 5k-6k from your Emergency funds towards paying the Student loan. As your are comfortably going with your financial position and stable with your job, I guess this could be the right move now.

[kanjoh]

It might not be a bad idea to pay off some of the loan; however, it all depends on the tax advantages. Often, the interest on these loans is tax-deductible; if so it might make sense to stretch the loan long-term and instead invest in a long-term low-risk bond (like a municipal or investment-grade corporate) to meet the monthly payments. This way, you can hedge out risk while still standing to gain.