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You didn't sign on to a nonprofit staff or volunteer job to get rich. That's why you need "personal best practices" from our experts to help you give, spend, and save wisely.Should I pay off my student loan or pay into my 401K?
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PrintQ: I have about $2,000 saved up . . . Should I pay off my student loan, or pay into my 401K at work?
A: It depends on whether the nonprofit you work for matches your contribution to your 401K (or 403b) account. At many nonprofits, for example, if you contribute $2,000 into your 401K, your nonprofit employer will match it with $1,000. If this is your situation, contribute the $2,000 to your 401K.
On the other hand, if your employer does not match your contributions, it's better to put the $2,000 into an IRA (Individual Retirement Account), which you can set up at your bank (or broker, if you have one).
From a purely financial viewpoint, you would be better off with the IRA than paying off the student loan. First, the student loan almost certainly has lower interest fees than the interest income you would be earning on the IRA. Second, your contributions to your 401K are done before your taxable income is calculated: that lowers your payroll taxes and income taxes at the end of the year.
Of course, the intangible benefit of having paid off your student loan may be worth the relatively small difference on $2,000. Most importantly of all, congratulations on having saved $2,000!
What's Up With Warranties?
Q – I just bought a cell phone and got the extended warranty for
$99. Then I bought a $150 back-up hard drive to use at home, and decided not to get the extended warranty. But I honestly don’t know whether either decision was right!
$99. Then I bought a $150 back-up hard drive to use at home, and decided not to get the extended warranty. But I honestly don’t know whether either decision was right!
Blue Avocado Personal Finance -- I know the feeling: standing at the checkout line and the question catches us off guard – “Would you like to buy an extended warranty with that?”
Even under an extended warranty, your gadget may not get fixed. The most common reasons products break --"normal wear and tear" and accidents--are > Read more- Login or register to post comments
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