No. of Recommendations: 0
Hi, zero18!

<<I have amassed $34,000 in student loans at %7.75 interest. Add an additional $4,000 at 5%,...I have approximately $21,000 in assets. I see a scenario where I use all my assets to reduce the larger loan and then continue aggressively to pay them both off. Only then, when I've reached zero debt, would I begin investing.>>

First, I agree with you on investing after you've become free of your debts. You don't specify where the 21K in assets are, so I'm assuming that you're referring to available cash. If this is the case, you may want to use some of this to pay down your debt, but you want to be sure to not leave yourself with an emergency fund. You always want to have access to funds in case unforeseen circumstances arise.

<<Given that the interest rates are comparitively low, is there a better scenario that involves the combination of paying off debt with investing?>>

That's a tough call. I think you're asking about income from investments to use as a means of paying off the debt, and that could be risky. While you have the advantage of low interest, you don't want to put the assets at risk by investing money that you will definitely be needing to get your hands on.

<<Also, how do you feel about paying off any remainder of the higher interest loan with credit cards offering low introductory rates, and then playing the transfer game among new credit cards?>>

This is a very dangerous thing to consider, in my opinion. I wouldn't take a chance playing with credit cards for this purpose, as credit cards can become a source of debt that can get out of control. Besides, even with low introductory rates, I think you'd have a hard time finding one that would beat what you're already paying. Additionally, the introductory rates change after a period of time.

My thought would be to use *some* of the available cash you have to get the debt down to a more manageable level, and then make sure you keep up with your payment schedule. Along with this, you can make great headway on the principle by sending extra with each payment--send as much as you can handle. It will dramatically reduce the debt, and shorten the lifespan of the loan. Make sure you contact the lender to make it clear that you want the extra money you send to go directly to the principle. They should have no problem with that.

Good luck!

...but I still am...

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