Without factoring in risk, paying off the student loan is an easy decision. Unfortunately, life is not without risk. Two months after you pay down the loan, you absolutely must have $1,000 for an emergency. Without the $1,000 in savings, you might be required to borrow the money at 15% on your credit card. Having cash in hand gives you options and options have inherent value.
He’s right of course – life has a nasty habit of springing the expected on you – and if you haven’t got any emergency savings, it may be best to keep your savings building up rather than paying off the loan earlier than necessary.
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