Using Savings for First Property or Pay Student Loan

[Mark Duhamel]

Hello all,

I am just getting started and have a decent amount of money saved, about $45k. I am looking into buying rental properties, but I’m unsure if I should first pay off one of my student loans that has a high interest rate? I consider this loan to be my worst debt as far as dollar amount and interest rate.

Details are as followed:

$25,727.09 is the payoff:

Current interest rate is 7.59%

118 payment remaining (was a 15 year loan originally)

Monthly payment is $342.54, of that $161.62 goes to interest every month.

I have another student loan, but it is federal and will be gone in 4 more years thanks to the student loan forgiveness program for public safety workers. My wife has a federal loan as well but the interest rate is far more reasonable than the loan I detailed above.

So I have a guaranteed 7.59% return and an extra ~$350 in my pocket if I pay this loan off.

Can I do better with this $26k or am I a fool to keep this loan around? If it matters, with my current income and expenses I save about $3k a month, meaning I will have this money recouped in about 8-9 months.

I appreciate any and all input/insight!