Debt Payoff or not?
Hello,
Looking for some input from the BP Community.
My wife has $15k remaining of outstanding student loans. Our payments are $300/ month and the interest rate is at 3% fixed (2% after tax deduction). We have some available funds right now to pay them off, and we won't need the money for anything in the foreseeable future. However, I am actively looking for properties to purchase and I have $50k to buy another property above and beyond the 15k. We pay $50 a month in interest and this amount is deducted from our taxes, so the 15k costs us $33/month in interest net. My debt eliminator self wants to pay off the loans so I don't have to think about them anymore and to improve our personal financial situation. I can look at it like a $15k investment makes me $300/month for the next 6 years(that is the remaining loan term), a 24% CoCR. On the other hand my inner Real Estate Investor says that 2% is cheap money, and that I should hold onto the money in case I need it to buy or renovate my next property which could surface in the near future. My current Big Picture Goal is to increase my passive income from rentals so I can pursue it full time. Both buying more property and reducing my monthly expenses help me get there quicker.
Would you pay off the loans or keep the money to buy another cash flowing property?
Thanks for your input!