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I have $23k in student loans and pay $400/mo on them. I have about $2500 left over after my bills each month. I have a 401k and am already contributing the maximum on it.

Does it make sense to spend my excess income to reduce my student loan debt to $0 to free up my $400 each month, or should I find some kind of investment to put it in? My wife also has similar student loan debt and I was thinking of tackling hers after mine.

From my little understanding of the stock market it doesn't seem like it had been performing too well lately.

Looking for advice on how to proceed to utilize my excess income and maximize my returns.

Thanks in advance.

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  • How much of the $400 per month is repayment of principal and how much is interest?
    – Lawrence
    Dec 12, 2018 at 11:00
  • It is 100% principle. I have been paying on it for awhile and the remaining is principle minus the small amount of interest accumulated from that each month.
    – jacksonecac
    Dec 12, 2018 at 11:01
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    The $400 per month can't be 100% for principal repayments unless the loan is an interest-free loan. That is, if you're not accounting for interest elsewhere.
    – Lawrence
    Dec 12, 2018 at 11:02
  • Like I said most of the interest Is paid off. There is currently $34 and change of interest of the $23,000
    – jacksonecac
    Dec 12, 2018 at 11:04
  • Hmm, if there's no ongoing interest accruing, what is the financial incentive for repaying the principal at all? Why not just pay the $34 to $35 of interest owed, then leave your money earning interest at the bank?
    – Lawrence
    Dec 12, 2018 at 11:08

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From my little understanding of the stock market it doesnt seem like it had been performing too well lately.

This is irrelevant.

Looking for advice on how to proceed to utilize my excess income and maximize my returns.

Pay the loan.

A loan is a guaranteed cost. Investing is a maybe gain (and a maybe loss); whether or not the stock market has done well today/yesterday/this week/this month/last year/whatever doesn't matter. Just pay the loan unless you have some other nearish term goal for your money; or other debt that costs more than this loan.

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    Do what quid says. Once your loans are paid off you can invest with impunity. BTW, in most states, your wife's loan is also your loan. It would be wise to call the loans in question "ours".
    – Pete B.
    Dec 12, 2018 at 12:02

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