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Originally Posted by Iowanian
Before paying that I would consider if you have worse debt. At least the interest on that student debt is tax deductible. Are your cars debts paid off?
That interest rate isn't very good for student loans, so maybe paying it off is better long term to free up that monthly money. I doubt you'll get much done on a discount.
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You're right on the whole. But not all student loan interest is deductible. There is a cap and phaseouts in there, and I'd have to look them up.
The theory is sound though, if you have any debt that is at a higher interest rate, pay that off first. Or if you can achieve a higher return in some other financial instrument - 401K or whatever, it would be better to just keep paying and funnel the money into an instrument.
Tax sheltered instruments will have yearly caps, so you'll have to hang onto some of that money or do some monkeying around. Your 401K will have the highest cap so if you and the wife go max out the 401K and use the money to live on, that would be better from a net value perspective. If you inherited an actual retirment fund as the beneficiary, that's even better. Just roll that shit into what you've got or a ROTH if you think you can beat it and forget about it.