conversation: User (fossilbebe): "I owe about 15900 at 4.3% average (mix of loans from 3.86 and 4.66 through my Great Lakes; could be 4.05 average if I do auto payments) Currently paying 172 a month. I was saving up about 16k in order to do lump payment (should have that within the next couple months) but I’m starting to realize that the interest is kinda low. Would it be better to just double My payment and forget about the loan? That way I’m not dropping all my savings on to this. This is my only debt. I haven’t contributed anything to retirement because I wanted to get this paid off first. "
  Self: "Based on what you said,using your average interest rate and your payment and total loan amount we can say based on a 10 year loan that your paying about $3700 in interest over the course of the ten years at a $163.26 monthly payment. If you left that same $15,900 bucks in the bank at a 2% interest rate (online ally cd for example) you would have $19,420 bucks or an additional $3,520 after 10 years. \n\nIf you left the money in the bank and just added more to each payment every month, say make it an even $500 you would be done with the loans at around month 33 and would have paid about $1,010 in interest. Your money sitting in the bank at that 2% interest rate would have made $983 bucks during the same time. \n\nAgain pretty close but still less than if you paid it off. Obviously if you paid it off you would pay no more interest. But you would also be down to nothing in terms of liquidity. It all depends on how important it is to have liquid cash on hand. \n\nIf your young and not planning on buying a place to live then I would say dump it in the loans and save the interest. If you need the cash on hand then I would say just add to each payment every month. Take this comment with a grain of salt because I made a few assumptions on the loan terms and kept it simple on the interest rate of the savings. If you go the additional payment route put it towards the higher interest loans first. \n\nGood luck. "
  