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Contribute to 403(b) or Roth while paying down debt? Which makes more sense?

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I'm a full-time student with a part-time job. This year, I'm trying to aggressively tackle my 10k car loan debt at 7%. I keep a small safety cushion of savings in an online savings account of 5.30%.


I've just started a new job last week. For the first time ever, I have an opportunity to contribute to a 403(b) at my workplace. My employer will not match contributions.


One of my friends is a licensed financial advisor and tells me I might be better off opening a Roth IRA instead of contributing to my 403(b). She says there are now opportunities to open a Roth with as low as $25.


Without 403(b) employer matches, any advice on the wisest choice given my current situation and limited income stream?

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I would do both. Put a minimum into the IRA to open it. Put 50% into the IRA. Open the 403B with your employer. Put the other 50% in here. That way you gather interest on both. Once you quit your job (I'm under the assumption that it's short term and temporary) roll the 403b over into your IRA. You won't have any penalties. If you withdraw funds from either, they will traditionally charge you 10% penalty.

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