Credit Debt Cures

what would dave ramsey finanical guru recommend? Student loans vs. Mortgage?

have about 36K in student loans and 123K in mortgage..... student loan is fixed at 1.625% and the house is fixed (30yr/2005) at 5.875. Soon as I have a car payed off it these will be our only debts..... would dave still recommend to focus on the student loans despite the LOW interest rate--- or would you think he would say start working on the mortgage instead?

Public Comments

1. I think he'd go with getting the student loan payed off, it's the smaller of the last two.
2. I think he would want you to get rid of the student loans. It's the smaller balance. You can use the mortgage as a tax deduction. His usual philosophy is pay off the smaller debts first.
3. I dont know what he would say, despite being able to pay off the student loan quicker, I would go for the mortgage (as long as there is no prepayment penalty. In the long run it would save you more money and will build you more equity in case you ever need it.
4. Pay off the student loan. Then build your 3-6 month emergency fund, then start your 15% retirement funds then pay extra on the house. Since the house loan is so much more, he wants you to have your emergency fund and your retirement going so that you can have fun while paying off your home loan. The student loan is just a noose around your neck, even though they interest rate is really low, you could use that monthly payment to fund your retirement when you are done with the debt & emergency fund! Below is a link to his website to almost your exact question. Keep following his advice, you will win with money.
5. I believe that Dave would still tell you to pay off the student loan, as baby step 2 is completed when you are debt free except for the house.