[USER]

What would you do?
received extra $7k.
Trying to see if I should max Roth IRA for the year or put $7k extra towards student loan.

Student loan current balance: $11k
Interest rate at 5%

Emergency fund is fully funded.

No credit cards debt.

[Rachel]

I’d do the ROTH IRA – student loan interest is a tax write off

[Endri]

Roth IRA always before debt, you are not getting that back. Don’t listen to people that tell you debt first.

Debt can be a great motivator especially that little, it reminds you to stop spending and not to go back there (even the good kind of debt).

You can work on debt next year as you will have time for next year’s roth until April 2026.

And roth contributions can be withdrawn penalty free if something happens.

[Bill]

It’s not really a life changing decision, but personally, I would fund the Roth and then cash flow those loans down asap.

You can always withdraw the Roth money if you change your mind.

[Noa]

When I hesitate between two reasonably good options, I tend to just do something in the middle. $3.5k towards each.

In your shoes though, I’d just put it towards the loan. Get that paid off and move on.

[Rick]

Definitely work on a financial order of operations. You will find a ton of posts and comments on that topic here with a lot of helpful info.

With that done, you simple look at it to see where you already decided next free dollar should go.

I may break from most common advice which I expect to be pay the student loans….

but I would say fund 2024 Roth as once its contribution window closes it really closes so there is significant long term value in getting that done.

[Frank]

Fill up your retirement accounts. It’s use it or lose it every year.

[Erica]

This is a psychological, not financial, decision for me bc you are SO CLOSE to being debt free!

I would put it towards debt!

[Dani]

Is your student loan balance growing or are you taking out new loans where it will grow?

What is the interest rate? I’d probably put most or all of it in the Roth unless I was planning to take out more student loans in the future or if the interest rate was really high.

[Nicole]

If it were me I would put toward Roth BUT psychologically may feel soooo much better to get rid of that debt.

I don’t think there’s a wrong decision here.

Do what feels good to you in this case!

[Lauren]

I would either split it 50-50 or put it all in the IRA. I regret the years I didn’t max out my Roth IRA!

(I did pay off my student loans early, but it would have been worth it to me in retrospect to stretch that out a bit and max out an IRA earlier.)

[Trevis]

I want to say do the debt, but in practice when I had debt I always did both and not one or the other.

[Author]

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