Comments on: Personal Balance Sheet, November 2007 ($121,861, +1.8%)

By: Madison

Madison — Tue, 04 Dec 2007 15:54:35 +0000

@Mike As long as the spread between the interest you are charged and the tax adjusted interest you earn is positive, you are coming out ahead by the numbers. You may be paying interest, but you are earning more. At 2.75% I might keep that loan forever!

By: Mike

Mike — Tue, 04 Dec 2007 03:08:32 +0000

I find the “early payoff of student loans” a very interesting topic, and surely will be blogging about it in the near future. My issue is that my savings account is producing 4.7% and my student loan interest rate is 2.75%. However, most student loan payoff schedules are over long time periods (5 – 20 yrs). My issue: is it really worth paying off over such a long time span, because of the period of time you are paying a good amount of interest in total (in terms of $, not %). I have been waffling with this topic for the past couple years, and have come to the conclusion that this is the year to pay my loans of early, and then invest the amount each month, equal to the monthly amount I would be paying student loans.

By: MikeL

MikeL — Mon, 03 Dec 2007 16:51:54 +0000

Thank you for the explanation, I did not know there was a limit. How ironic is this: At the end of the year, my earnings will be about $48,000.00. Should I pass on my 5% raise this January?! Tough call, ha!

By: Flexo

Flexo — Mon, 03 Dec 2007 14:36:28 +0000

Thanks for the comments everyone! As I mentioned in the article, I want to remain flush with cash for the time being, but also as I mentioned in the article, I will consider being more aggressive about paying down my student loan in 2008, after tax season. Darrin, thanks for summarizing those points.

Mike L: The deduction for student loan interest phases out starting at an AGI of $50,000 and phases out completely at $65,000. I may not qualify for the deduction depending on how my adjustment to income work out.

By: Mike L

Mike L — Mon, 03 Dec 2007 13:44:25 +0000

Let’s not forget about the tax deductible interest with Student Loans.

By: Darrin

Darrin — Mon, 03 Dec 2007 04:30:40 +0000

I’m sure Flexo will respond, but I’m just noting that he said his savings was anywhere from 4.2 to 4.75 percent, and his student loans were at 4.5…my guess is that the majority of the money is at 4.75, and therefor the loan is “costing” him less than paying it off would. In doing this he still also:
~~Retains liquidity, he’s not spending a large portion of his COH to pay off the load which frees it for a potential job loss or other emergency
~~Continues to build credit history, by making his (possibly automatic) monthly payments…

Only he can tell us for sure, but this is the 2cents from a Junior Business major…

By: Adeem Zafar

Adeem Zafar — Mon, 03 Dec 2007 03:19:01 +0000

At least you came out ahead! Good for you!

By: 2million

2million — Mon, 03 Dec 2007 02:53:37 +0000

Well done Flexo! A positive month with the market weighing down your growth is an accomplishment.

By: Frugal pursuit

Frugal pursuit — Mon, 03 Dec 2007 02:30:17 +0000

That is a great net worth percentage gain. I have only just started to keep track of my net worth and November just squeaked by in the positive range. Your balance sheet is quite impressive. The money in your savings looks great for a downpayment on a house. I had only a fraction of that when buying my house. More would have been better I think.

By: tlange

tlange — Sun, 02 Dec 2007 22:37:56 +0000

Why wouldn’t you take enough money out of savings to pay off your student loans? I would think that it would be better to have that debt completely taken care of, rather than it hanging on endlessly.

By: SingleGuyMoney

SingleGuyMoney — Sun, 02 Dec 2007 22:16:47 +0000

Congratulations on the net worth increase As J.C pointed out, your are definitely one of the few. November was my worst month this year!

By: MillionDollarJourney

MillionDollarJourney — Sun, 02 Dec 2007 21:30:56 +0000

Congrats on the positive net worth this month Flexo! With the down markets, I barely squeezed out positive growth this month.

By: KW

KW — Sun, 02 Dec 2007 21:07:55 +0000

Why not pay off that student loan with some of the 42,000 in savings?

By: J.C.

J.C. — Sun, 02 Dec 2007 20:56:55 +0000

A positive change in networth for Nov? You are one of very few! Congratulations.