Tax refund...what should I do?

[James C.]

I've been stalking the forums for a few weeks now; love everything that I'm learning here!

I just received a tax refund check in the mail*, and I'm wondering what some smart people would suggest doing. 

*Before you ask / wonder, yes, it's almost July, but I filed an extension and the check was just delivered today.

I'm not yet active in REI, but I'm sure learning as much as I can -- in large part thanks to y'all on this forum -- so that I'm at least somewhat prepared for that first opportunity.

My initial thought was to completely pay off my wife's 6.5% adjustable student loan. Rates on this loan have gone up in the past year, and will likely continue ticking higher...at this pace, it won't be long before this loan hits 7%+ interest.

Good / bad is that while this refund check would completely wipe out this particular loan, it'd take pretty much the entire refund check to do so.

In case it helps, I have no CC debt (making this student loan the highest interest debt that we carry) & 2 car loans (one is like 2.6% and the other is like 3.5% -- so both auto loans are low interest).

So...save this check to go toward my first REI venture, or get rid of this loan once and for all?

[Andrew B.]

pay off the adjustable rate student loan. this is an instant 6.5%+ rate of return. in addition, by lowering your debts, you are more properly poised to invest ad your debt to income is lower.