Pay Off Loans or Save for Investing?

Question

Listening to The Bigger Pockets Podcast with J Scott got me thinking about how I am currently saving my money to begin investing in real estate. I am currently saving an X amount each month to invest with, but I also have student loans that I am paying extra on each month to pay them off quicker. I have always used the logic that if your investment will result in a larger interest than the interest on your loans, you should invest the money as opposed to paying extra on the loan. I am contemplating if I should begin saving that extra payment amount for future investments in properties, or if I should continue to pay the extra on the loans. Since I have yet to purchase any property, I am having trouble deciding the best path to take here. I am curious to see what other's opinion on this are. Thanks!

Jaysen Medhurst · Answer

@Cody Mackey, your logic is solid. But in life, of course, things are never that cut and dry.

Money is emotional. Especially, as you're getting your financial house in order and trying to build financial security. Don't let anyone tell you differently. You need to decide if the "spread" you're earning is worth the emotional cost of continuing to have the student loans over your head.

Coming at it from a different angle, let's say you take the "extra" money, put it towards a flip, and then take the profit to pay off the student loans? You kind of split the difference.

Cody Mackey · Answer

Thanks for the input @Jaysen Medhurst. The 'emotional cost' is the main reason I have been paying extra on my student loans. However, I've never put myself in a position to potentially make a decent amount in an investment (just your typical 401k / IRA investing). I think if I found, and analyzed, a property that shows I could actually have a higher return than my current rate, the answer would be easier. Right now its been difficult for me to find something (but I am finally taking action to change that).