Buying a Home v. Paying Off Your Student Loans
A reader posed a question in Michelle Singletary’s Washington Post column today about whether she and her husband should pay off their student loans – $70,000+ so far – before buying a house. Singletary said yes and that they should also consider temporarily reducing what they’re putting in their retirement plans in order to put more money on the student loans:
I suggest that even if you have student loan debt, save up enough money to cover a few months of living expenses. Stop saving at that point and use any extra money to pay down the student loans, even if the interest rate is low.
Temporarily you could also reduce how much you have going into your workplace retirement plans. At least put in enough to get a match and then use the extra funds to pay down the student loan debt. When that debt is paid off, you can go right back to maxing out your retirement and building up a savings cushion.
For me, I just wouldn’t want to buy a home with $70,000 in debt. What if one of you loses your job? What if one of you gets sick? It’s better to get rid of the student loans before taking on the largest debt in your life.
Wow. Considering that many people take at least 10 years to pay off their student loans, we are talking about a whole lot of people out there being unable to afford a home…because they went to college. On top of that, now they are being advised to save less for retirement so they can pay down their loans. So by the time they actually pay off the loans and can maybe start thinking about that house, they instead need to start funnelling money into their inadequate retirement accounts to make up for all of the time they lost.
Something is seriously wrong with this picture.
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