Quote:
Originally Posted by O.city
I can make the payment I’m just curious if I should not put into retirement until I get the loan payed off
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Can you deduct the loan interest costs on your taxes?
Assuming you can't get your loan interest down, your loan payments are the equivalent of a guaranteed 7% return. If you can deduct the payment, then they're kind of a guaranteed 10% return.
Paying into an IRA has the same tax benefit, so if the loan interest is deductible then you have to beat a 7%return, recognizing that it's a guaranteed return. That's probably a breakeven proposition to do over a period of years, and I'd rather eliminate debt. If the loan interest is not deductible, then you just need to beat roughly a 4% guaranteed return on the IRA (7% - tax deduction), which is easy to do in the long term.
Did I do the math right there? Someone double check.