Why Shouldn't I Invest When I'm Still in Debt?

Patrick and his wife have some student loans left, and they're considering funding their IRAs while they work on their student loans. How does Dave feel about that?

QUESTION: Patrick in Seattle and his wife have some student loans left, and they’re considering funding their IRAs while they work on their student loans. How does Dave feel about that?

ANSWER: I wouldn’t. I would stop all saving and all investing and attack the student loans with a vengeance. The problem is student loans in many cases—and I’m guessing in yours—are so large that being able to see the end of it feels hopeless. There is only one way to take down a giant, and that is to start biting him in the ankle immediately. You’ve got to gnaw your way all the way up. There’s just no way around it, and people who play with their student loans or who reduce their intensity of attacking their student loans, which we could call playing with the student loan, end up taking a decade to get out.

You ought to be done with your student loans in less than two years. You ought to be completely paid off in 18 months. This is a short period of time. You’re not facing five years; you’re facing 18 months. You really ought to roll up your sleeves and get ticked off at this thing and attack it.

My guess is that you are a numbers guy. What I learned as one numbers guy talking to another numbers guy is that there is a power in behavior modification that on the short term supersedes the power of the math. I understand the temptation, but I would stick with it.