Re: Sunday dinner

[Robert <http://dummy.us.eu.org/robert>]

 > From: Robert <http://dummy.us.eu.org/robert>
 > Date: Tue, 20 Aug 2013 06:43:19 -0700
 >
 >  > From: h <http://www.gmail.com/~h40>
 >  > Date: Mon, 19 Aug 2013 22:06:00 -0700
 >  >
 >  > Everything you said seemed to make sense to me the other night --- it was
 >  > good conversation and some good financial insight for me to consider as I
 >  > move forward so thanks.
 > 
 > I was thinking more about that last night.  I think, given that a student
 > loan is a fixed rate, one must also consider timing, i.e., how the stock
 > market is doing at any given time.  If the stock market is relatively low
 > (like it was in 2009), then it probably makes sense to put more towards
 > investments and one's retirement; if the stock market is doing relatively
 > well, it probably makes sense to pay off one's loans as quickly as
 > possible.
 > 
 > In general, 'tho, the rule of thumb should be to pay off loans, especially
 > non-negotiable loans, as quickly as possible.

How much does Stanford match for your 401k?  I guess that could be another
factor because, for the amount that you're contributing up to the matching
amount, you're essentially doubling the return rate during the
contribution year.  So, say you're earning 6% in your 401k; up to that
matching amount, you'll be earning 12% for that year.  (Anything beyond
the matching amount just reverts back to the 6%, however.  Also, beyond
the first year, again, it reverts back to 6%.)  That means that, if your
student loan is 4%, the spread between that and your return rate is 12% -
4% = 8% for up to the matching amount for that year, which is pretty good.