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Subject:  Unemotional tie to debt? Date:  4/6/1999  4:14 PM
Author:  Mei2 Number:  8419 of 312161

Greetings, all!

Wanted to pick your brains...

I recall reading similar questions ("should I invest now or pay off debt?"), so please direct me to former posts if you feel those would help answer my question.

After I finish paying off my credit card debt (shooting for September 1999), I was planning on channeling those monthly payments ($300) toward my student loan payments.

However, an acquaintance suggested that I not have an emotional tie to my debt (i.e., "debt is bad, I must pay off as soon as possible," "Oh, let me be free of my student loans!" etc.) and that instead of channeling the $300 extra towards student loans, to plunk it into the market.

His reasoning: I would be better off in twenty years (the length of my student loan if I made minimum monthly payments) if I plunked that extra $300/month into any index fund than if I applied it to my student loan and paid off the student loan early.

Outstanding student loan debt: about $32,000, already consolidated at 8.25% with Citibank, The Student Loan Corporation. (I probably have 19 years left on this loan.)

Minimum monthly payment: $280, but I pay more than that as it is. After the credit card payments are finished, I was planning on paying about $600-700/month towards my student loan.

What do you guys think about my acquaintance's line of thinking? How would I calculate this?

Many thanks. Keep Fooling!

Iron Maiden
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