To Pay Down Debt or Finance Future Investments....??

[Benjamin Small]

Hello Everyone...

Financial matters can be such an emotional decision. I have some cash savings along with a modest investment property and a primary residence. I own both properties outright with no mortgage payments. I am saving in a 401k for retirement as well. What I do owe is student loans, and I would like to pursue a Master's degree this fall, which will cost almost $20k over the next two years. A portion of the student loans are private loans through Navient, formerly Sallie Mae, and the rest are federal.

I have almost $20k in cash sitting on the sidelines waiting for the right opportunity.

I could potentially pay down a significant portion of my student loan debt right now, that altogether totals over $60k. I could rehab a property and either rent it out or sell it after the rehab is complete. I could also pay outright for my schooling come August and avoid getting any more student loans.

My main hope is to free myself from the rat race as quickly as possible. I want to pursue an advanced degree so that I can teach in college. I keep my expenses low and I am generally happy with things that way. I want to own a multifamily property, or several, which have some solid cash flow and not depend on a full time job to sustain my expenses.

I am emotionally torn between paying off student loans and holding on to cash and waiting for the right future investment opportunities. I am not quite sure what I would like to do and wondered if anyone had some thoughts.

[Turner Monroe]

@Josh Collins has some interesting points. Education is great, but what is your goal for it? There is often much cheaper ways to get an equivalent or better education than is taught in colleges. There are so many books, podcasts, and free courses out there now, this is the age of the Internet and free information after all! While going to a university program is certainly the easier, pre-packaged option, it's not always the best. 

For instance, if you are going to get a business degree you could go to a business school and go into debt, sure. Or you could go into the same amount of debt and do self study and start your own business, learning on the job. At the end of the master's program you will definitely be in more, while if you start your own business, you might fail and end up in the same amount of debt, or you could succeed and actually make money.It's higher risk, but also higher reward. 

The do-it-yourself approach is almost always the cheaper, but riskier and more difficult, than the pay to play approach. It also usually has greater rewards. It's true in education, real estate investing (turnkey vs flipping), business (self-employed vs 9-5), and more. I'm not saying that getting a Master's is a bad thing to do, it may be exactly the right fit for you at exactly the right price, especially if your goal is to get a teaching job in a University. I just don't think anything should be taken for granted, there's no "right" way to do things, and you don't explore all the options with an open mind, you'll never know which one is truly best for you.

Education is absolutely the best investment you can make, but there are many ways to get an education and it is often less expensive than people think.