Hi all,
I (29M) am a 4th-year associate at a boutique law firm (market pay). When I started, I wasn’t sure if I’d stick with Big Law or head into government, so my plan was to pay off loans by 30 if I could. Right now I’ve got about $160k in student loans, no other debt, and by year-end I’ll have ~$160k in cash plus a over $110k in my 401k. I’ve just been making minimum loan payments and keeping the extra in a HYSA for flexibility.
Part of me wants to just wipe out the loans next March after setting aside ~$15–20k for a 3-month emergency fund. I actually like private practice and plan to stick around, so even if I drain the cash, I figure I can rebuild it in about a year. Plus, worst case if I lose my job, I’d at least be debt-free with high earning power.
The other part of me thinks dropping $160k in one shot is crazy. My highest rate is 7.35% and the average is 5.79%. I could keep investing, grow the money faster, and hold a bigger cushion. Most of my friends think this route is a no-brainer.
Anyone else been in this situation? How did you decide between paying it all off at once vs. spreading it out?
Other factors to consider: - No car - No house - Soon to be engaged (planning wedding eventually) - All loans are federal - No Roth IRA (I know, a mistep in hindsight).