Quote:
Originally Posted by anonymous_saver
I agree that school loan debt is "good debt". Usually anyways.
I was mainly suggesting this debt gets paid off soon because of the large monthly payment of $600.
And yes, the original poster does sound like they are doing well.
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Without trying to rain on anyone parade (we are all trying to help), paying off 100k of student loan debt is the equivalent of many of us paying off a mortgage... $600 is not a large payment, IMO, from my standpoint I paid $1000/month in student loan payments when I graduated. It is close to 25% of budget, but not a problem, IMO.
I do not think that sacraficing one goal (retirement saving for example) to pay down this debt is a good move for now. I think starting an IRA should take priority, as the IRA could probably have 100k in it well before the student loan debt is even knocked down to 50k. Compounding is an amazing thing (8th wonder of the world?) and the sooner the IRA is started, the easier all finanical goals will be.
I do think steps should be taken to send extra to student loans (to start putting a dent in them), but not at expense of other goals, IMO.
I tried finding a calculator to see where $600/mo pays off 100k of debt, but without knowing the rate and total owed, tough to figure out.
I know a 100k mortgage at 6% costs $666/mo. One extra payment per year knocks this down from 30 years to 22, I think This one payment is $50/month. Assuming student loan numbers are similar, $50 extra is enough to start with, I think OP will find out paying down the loans before saving for the house makes sense (as $600 to $800 a month going into house fund will beat $100 going into same account and $600 going to student loans.
Based on posts, OP does not appear to have more the $600 discretionary funds for funding the various goals (because OP suggested $1200/month loan payments were too high).
I am thinking
$50 to student loans
$200 to IRA
$100 to emergency fund (already has nearly 4-5 months expenses in it already- not a priority, just a goal)
Is about where the money would reach.
The next step might be to compare rent payment to payment on a condo of similar size (square footage wise). This would lower his tax bill, allowing for more take home pay. If he could afford the condo and the student loans, then the student loans get paid off faster, and the $600 gets freed up in the budget.