God Gave Her The Exact Amount She Needs

Meg has a 23-year-old daughter with $13,000 in student loan debt. Her grandparents are giving her a $12,500 gift. Should she pay off the student loan debt or take the money and invest it in a Roth IRA?

QUESTION: Meg in Salt Lake City has a 23-year-old daughter with $13,000 in student loan debt. Her grandparents are dissolving an LLC and giving her $12,500 as a gift. Should she pay off the student loan debt or take the money and invest it in a Roth IRA and keep working on the student loans herself?

ANSWER: Let’s pretend she didn’t have any student loans for a minute. Would it be wise for her to borrow money on a student loan in order to invest in a Roth IRA? It’s the same thing. If you don’t pay it off and instead invest it, it’s as if you borrowed the money to invest, isn’t it?

She needs to get this debt cleaned up, and it’s the perfect opportunity. Isn’t it a little weird that God gave her the exact amount she needs to pay this off? I don’t think there’s any question what this kid needs to do. She needs to pay this loan off. She can’t do a Roth IRA except to the point that she has an earned income. The last thing she needs is a student loan waiting on her when she gets out of graduate school. We’re not in a position to be an investor. We have student loan debt. She needs to clean up the student loan debt. Then she should save up a huge emergency fund to make sure she’s able to complete her graduate studies without debt.

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