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1. 

   irishoptimist
   

   Novice
   Joined: Mar '12
   Posts: 3

   Hi Everybody. I think in this group I've found the kind of thinkers I need to validate my own thoughts. Anyway, what better time to start with a question. I have a student loan that I'm paying off $136 a month. The interest rate is 3.5%, and I owe about $11,500 on it. I have an IRA that's worth depending on the day, about $12. I can use that IRA to pay off the student loan penalty-free. I'd owe the taxes. My question is, should I? I'm currently not making any contributions to it, as I'm working part-time, and really don't have, nor really want to work more than part-time. Your thoughts.

   Posted 1 year ago #
2. 

   JohnnyH
   

   Expert
   Joined: Jul '10
   Posts: 1,363

   Welcome! and checkout this thread:
   http://www.fatwallet.com/forums/finance/1177988/

   Posted 1 year ago #
3. 

   jacob
   

   Expert
   Joined: Jul '10
   Posts: 3,294

   I wouldn't. 3.5% is close to inflation so it's "free", whereas the IRA is growing tax-deferred. I'd only do it if absolutely necessary, i.e. to avoid taking higher interest loans to pay the student loan.

   Posted 1 year ago #
4. 

   dragoncar
   

   Expert
   Joined: Oct '10
   Posts: 1,287

   Same here, I wouldn't pay it off. The only reason to pay it off is if doing so would somehow make you spend less money (there are those who would say oh, I have $12k in my IRA so I can stop saving for a while).

   Posted 1 year ago #
5. 

   jennypenny
   

   Expert
   Joined: Jul '11
   Posts: 1,338

   Love the avatar (tá fréamh den Éireannach ionam).

   Fáilte.

   Posted 1 year ago #
6. 

   Dragline
   

   Master
   Joined: Aug '11
   Posts: 959

   I concur with the others.

   Posted 1 year ago #
7. 

   irishoptimist
   

   Novice
   Joined: Mar '12
   Posts: 3

   Thanks for the replies everybody. I guess I just hate having this debt, and felt that as I was no longer contributing to the IRA, I was simply deferring the usage of that $12k until legal retirement age, when I could use it now to free up $136 a month.

   Posted 1 year ago #
8. 

   celliott
   

   Apprentice
   Joined: May '11
   Posts: 62

   IRA contributions can never be replaced. Not like 401k where you can loan it to yourself and pay it back with interest.

   Posted 1 year ago #
9. 

   irishoptimist
   

   Novice
   Joined: Mar '12
   Posts: 3

   OK. I know realize the error of my ways, and in particular that fact that I should have had my money in dividend-earning funds if it's just going to sit there. I'm with Fidelity. Any suggestions as to which of their funds generates the best dividends would be greatly appreciated. Cheers.

   Posted 1 year ago #
10. 

    KevinW
    

    Master
    Joined: Aug '10
    Posts: 576

    You could look at Fidelity Equity Income or Fidelity Dividend Growth. The expense ratios on those are pretty bad, so if you're set on dividend stocks I'd look into ETFs, Vanguard's funds, or buying stocks yourself.

    Posted 1 year ago #

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