Long-Term Saving or Partially Pay Off Debt?

Lets say I have around 3k in savings. Should I put it in a long term investment (such as an IRA) or should I pay off 17% of my student loan?
I ask because I know the longer I wait to put money into an IRA or a long term saving account the less I will end up with in the end.

This money will continually make money in an IRA account; whereas, the interest you pay on a student loan ends when the loan in paid off. So it makes sense in the long run to be sure that the money makes it to the IRA; however, if the return rate of the IRA is lower than the interest you pay on student loans, it is more efficient to put the money towards the loans now, and THEN to put $3,000 in the IRA once the loan is paid off. If the question is whether or not to put the money in an IRA account at all, do it now, because you never know what may lie ahead, and money in an IRA account for 30 years beats money towards a student loan for 10 years.

Above all, I would be sure that I could pay my student loans and other debts off without any doubt, before putting all of my money into long term, less accessible accounts. Also, be sure to keep some money in savings for an unexpected emergency.

Personally, I would put a reasonable amount towards both the loans and the IRA, so you have some money both places. I would also, be sure to budget a certain amount each month to put into an IRA account if possible; this way I can prepare myself for retirement, without breaking the bank all at once.

Let's say you can make 7% a year in an IRA, but you can make 7% just by paying off your student debt. Then you pay off the debt! Unless you can make substantially more in savings, it's better to pay off the debt. Even if you can make 9% in savings, if you're paying 7% in debt, it would take 36 years to double your money. It's better to work hard and pay off your debts and then put the same money into savings.

Pay off the debt. Your IRA will not give you a 17% gain.

It all comes down to whether you will end up paying more in interest on the debt than you will be able to earn on the IRA.

If the $3,000 will not retire your debt in total, you should begin to make regular payments to reduce the debt.

If the $3,000 will retire you debt, do so.

However, don't put that money into an IRA immediately. You need to have a rainy day fund in case you loose your job or decide to relocate.

You need to save in a secure investment (bank) an amount equal to at least 3 month's earnings. Ideally it should be a year, but that can take some time.

Find an book written 80+ years ago, called "The Richest Man In Babylon." It is a parable. You know, a story that has a teaching. This book changed my life.

If you are frugal, you can do much of all three.
First, you should save 10% of your income. If not 10% then 5%, but 10% is best.

Pay weekly 1/4 of your monthly loan payment. This in effect gives you 1 extra payment a year.

At the end of the year, deposit what you can in your IRA. That may be 6 month's of rainy day savings or more. Then work to put that amount back into your rainy day fund.

My favorite fund family is Vanguard and Oakmark. Very well managed no load funds, with a low management fee.

Good Luck.

You should invest it.

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