Just did some more number crunching using an online calculator
If I choose to only make the minimum payments over 30 years, and invest the 700 a month I would be paying off in principal I will end up with an extra 200k I would have paid out in interest.
Using an online calculator, if I invest 700 a month over 30 years with a 10% return, after 30 years that would be 1.5 million at the end of the period, for a profit of 1.3 million. But I would be in debt for 30 years instead of being totally out of debt in 15.
Mathematically it seems to make sense to invest the 700 and take the hit on the extra interest since I would be making more money in the end. It just feels strange to keep myself in debt instead of doing my best to get out of it (and i have 2 different rates for my student loans 2.7% for 18,500 and 6.7 for 37,000) since the mantra I always seem to read is to get out of your debts before you start investing - although I think that for the most part people are talking about credit card debt of which I have none.
Anyway, thanks for your input I really appreciate it. I will be sure to read your blog.
 |