I'm 25 years old and just finished my Undergrad in Kinesiology. Not looking to go back to school anytime in the near future. I start a new job in a week where I could be making minimum 30K/yr. I have $25k in student debt, no credit card debt and very little expenses (I live at home for the time being). I do know I should pay off my student debt but do I pay it all off right away? I also would like to know how someone in my situation should invest my money or what's left over after my debt is paid off. I also am interested in buying property. I don't need a house for a family but would like to get a two bedroom condo (with intentions to rent out the second bedroom). Do I have enough money here to even be thinking about this kind of investment? I feel a little over my head with all this and want to make sure I maximize the benefits of having this kind of money at this point in my life. I hope I can find a few suggestions here. Thanks for the helpful tips!

  • 1
    There is a lot of missing info here. Do you have savings? How much do houses/condos cost in your area? $30K/year is not that much, especially with $25K in debt, but it will go a lot farther towards housing in, say, Iowa than in California. Also, depending on how you received the $40K, you may owe taxes on it.
    – BrenBarn
    Commented Feb 17, 2015 at 2:50
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    What country are you in? There may be tax implications, for instance, on your student debt, the types of investment plans available to you, etc. Commented Feb 17, 2015 at 14:24
  • Related: 23 and on my own, what should I be doing?
    – Ben Miller
    Commented Feb 17, 2015 at 20:00

3 Answers 3


The chances are good that the interest you are going to pay on the debt is going to be higher than the interest you are going to receive on any type of short term investments.

That would make the paying off of the debt worth more to you in the long run than saving your money. Note that without the particulars of your situation this is all just theory crafting so consult the details of you loan agreements. I cannot imagine that a credit provider did not discuss this with you before you put pen on paper.


First priority is to set up an emergency fund of 6 months expenses. If you're going to be making ~30k a year, then that means you'll probably want to put away about 10k of it in a savings account or something else similarly liquid. After that, paying off your student loans probably makes the most sense depending on the rate. My general rule of thumb (and I'm sure others will disagree with me) is to pay off debts that are >=6.0% first before investing. Paying off debt is a risk-free return on your money, which makes it pretty valuable. It'll let you direct more of your monthly income into retirement savings, too.

After that, open up a Roth IRA. You can put a maximum of $5500 in it for this year. I like Betterment, but Wealthfront has a similar service.


If I were you, I would pay off my student loans today or tomorrow. Wouldn't it be nice to be completely debt free and not owe anyone anything? It doesn't matter what the interest rate of the loan is; there is no need to spend anymore time trying to worry about whether or not the market will allow you to make a tiny bit extra over what you are spending in interest on the loan. Just get rid of the debt, and you will get to keep every bit of the growth of your investments from here on out.

After the student loans are paid off, that leaves you with $15k. I would take $10k and put it in a savings account for an emergency fund, and put $5k as a start toward your retirement savings in a Roth IRA.

At this point, with a fully funded emergency fund, a start on your retirement savings, and no debts, you have really set yourself up for success. Learn how to budget your income so that you spend less than you make and can save up toward goals like a car (paid for in cash) and a down payment on a house.

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