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Old 02-09-2018, 12:39 PM
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Talking Kill (Pay off) last student loan with savings?

Hi everyone,

I joined about 3 years ago and received some amazing on how to save, pay loans faster and invest.

I am close to paying off my student loans and this is where I could use your advice.

Here's my current situation, I have:

Student Loan = $5.95K @ 3.15%
Savings = $11.5K in 1% savings account
Credit cards = $1.1K @ 0% until Dec/Jan

  • Filed my tax return and I should get back around $900 2-3 weeks from now.
  • Have a wedding abroad to attend in April for 1 week, paid for flight on CC, housing should be free staying with a friend. Estimating spending maybe $500 during that week.

So should I use $6K and pay off my final student loan?

Last edited by lootpacman; 02-09-2018 at 01:08 PM. Reason: updating APR
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Old 02-09-2018, 12:41 PM
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Quote:
Originally Posted by lootpacman View Post
Hi everyone,

I joined about 3 years ago and received some amazing on how to save, pay loans faster and invest.

I am close to paying off my student loans and this is where I could use your advice.

Here's my current situation, I have:

Student Loan = $5.95K
Savings = $11.5K in 1% savings account
Credit cards = $1.1K @ 0% until Dec/Jan

  • Filed my tax return and I should get back around $900 2-3 weeks from now.
  • Have a wedding abroad to attend in April for 1 week, paid for flight on CC, housing should be free staying with a friend. Estimating spending maybe $500 during that week.

So should I use $6K and pay off my final student loan?
What's the interest rate on the student loan?
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Old 02-09-2018, 12:42 PM
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Originally Posted by corn18 View Post
What's the interest rate on the student loan?
also, what is the required monthly payment?
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Old 02-09-2018, 12:54 PM
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If you pay off the loan in a lump sum, you can then take the money that was going to the loan payment and direct it to rebuild the savings. You would still have about a $5,000 EF which is sufficient to cover most anything that would happen in the short term.

As usual, there is a third choice other than do it or don't do it. That would be to accelerate the loan payment but not pay it off all at once. Maybe that would be paying $1,000/month for 6 months. That still knocks it out pretty quickly and saves you on interest without the rapid depletion of your savings. That option might also be the one that lets you sleep better at night if that's a concern here.

In any case, yes, I would speed up the loan repayment. From what you've said, I don't see any reason why you shouldn't be paid off in no more than 6 months max.

Welcome back by the way.
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Old 02-09-2018, 01:09 PM
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Quote:
Originally Posted by corn18 View Post
What's the interest rate on the student loan?
It's 3.15%
Monthly payment is: $100
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Old 02-09-2018, 01:14 PM
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Originally Posted by disneysteve View Post
If you pay off the loan in a lump sum, you can then take the money that was going to the loan payment and direct it to rebuild the savings. You would still have about a $5,000 EF which is sufficient to cover most anything that would happen in the short term.

As usual, there is a third choice other than do it or don't do it. That would be to accelerate the loan payment but not pay it off all at once. Maybe that would be paying $1,000/month for 6 months. That still knocks it out pretty quickly and saves you on interest without the rapid depletion of your savings. That option might also be the one that lets you sleep better at night if that's a concern here.

In any case, yes, I would speed up the loan repayment. From what you've said, I don't see any reason why you shouldn't be paid off in no more than 6 months max.

Welcome back by the way.
Thanks, good to be back.

The third option also sounds like a good approach; paying it off in 6 months.

I wanted to pay it off before the option for a summer vacation with family or friends is on the table.
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Old 02-09-2018, 01:16 PM
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Originally Posted by lootpacman View Post
It's 3.15%
Monthly payment is: $100
at $100/month, you won't recover those funds quickly.

I'd still do what DisneySteve said. come up with a plan to pay it off in a few months.

$1000 x 6 months
$2000 x 3 months

etc...

when you get your tax refund, add that to your monthly payment (1900 or 2900 or x+900).

be sure that the student loan company applies this to principal amount
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Old 02-09-2018, 01:16 PM
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Originally Posted by lootpacman View Post
I wanted to pay it off before the option for a summer vacation with family or friends is on the table.
What does that have to do with the issue?

Either you can afford a vacation or not. Whether or not you have a student loan doesn't really matter.
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Old 02-09-2018, 01:34 PM
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Originally Posted by disneysteve View Post
What does that have to do with the issue?

Either you can afford a vacation or not. Whether or not you have a student loan doesn't really matter.
Good point.
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Old 02-09-2018, 01:35 PM
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Originally Posted by Jluke View Post
at $100/month, you won't recover those funds quickly.

I'd still do what DisneySteve said. come up with a plan to pay it off in a few months.

$1000 x 6 months
$2000 x 3 months

etc...

when you get your tax refund, add that to your monthly payment (1900 or 2900 or x+900).

be sure that the student loan company applies this to principal amount
Looks like a good approach. I think I may end paying $2000 per month for 3 months.
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Old 02-09-2018, 05:16 PM
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Don't read the Want to Grow the US economy thread
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Old 02-11-2018, 04:58 PM
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Originally Posted by Thrif-t View Post
Don't read the Want to Grow the US economy thread
Is that a thread on this forum? I can't tell if you are using sarcasm or not.
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Old 02-11-2018, 05:04 PM
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Quote:
Originally Posted by lootpacman View Post
Is that a thread on this forum? I can't tell if you are using sarcasm or not.
Yes, its this thread:

https://www.savingadvice.com/forums/...ort-shows.html
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Old 02-11-2018, 08:51 PM
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Originally Posted by james.hendrickson View Post
Thanks for the link!
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Old 04-16-2018, 07:38 AM
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Default Paid off student loans

Hi everyone,

Thanks for all the help on debt reduction. I've paid off all my student loans as of last Thursday.

I've checked my student loan history and I started with $32k and paid a total around $38K with interest included. One month from now, will make it 4 years since I've started paying those loans down.

Current Status:
Rent: $1050
CC Debt: $1.5K @ 0%
Investments:
  • $27K in IRA
  • $6.4K in Roth IRA,
  • $6.5K in 401k (no match)
Savings: $7.9K @ 1.5% online savings
Age: 27 almost 28
Salary: $82K base (with bonus $90K before taxes)

Biggest dilemma is what my next goal should be?
- Save for house or investment property?
- Build bigger emergency fund?

I just recently got back from a vacation so that's out of the question.

Any ideas on how to proceed?

Last edited by lootpacman; 04-16-2018 at 08:12 AM. Reason: Adding rent
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Old 04-16-2018, 07:48 AM
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LPM - GREAT JOB on getting those student loans paid off!

It looks like you're not maxing out your 401(k), I'd consider doing that. While you may not get the matching, any contributions you make are deductible and you'll get the long term benefits of having the cash in the market.
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Old 04-16-2018, 07:54 AM
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Woah! Goals!!! That is such an awesome feat... I still have about $24K left to pay on mine, but am planning a more aggressive pay-off plan starting in June so that I can focus on buying a home

I agree with James though - you should definitely look into maxing out your retirement contributions, then consider other investments like real estate. Remember, one of the best investments you can make is in yourself.
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Old 04-16-2018, 07:56 AM
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Congrats!

Great job on getting rid of the loans'
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Old 04-16-2018, 08:41 AM
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Quote:
Originally Posted by james.hendrickson View Post
LPM - GREAT JOB on getting those student loans paid off!

It looks like you're not maxing out your 401(k), I'd consider doing that. While you may not get the matching, any contributions you make are deductible and you'll get the long term benefits of having the cash in the market.
Thanks! Great suggestion. One thing I always wondered if I'll be able to afford to buy a home or invest in something big at my salary if I max out my 401k.

If I max out at $18k, I have $64k in income left before taxes. Then $13.2k/yr for rent after taxes.

Off the top of my head, I have the aim to save $60K within the next 4-5 years, for home/investment property which means I need to save over $20K/yr.

I'm open to strategies and resources you al have used to accomplish your saving and investing goals. Also let me know if my thought process needs adjusting.
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Old 04-16-2018, 08:53 AM
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Quote:
Originally Posted by lootpacman View Post
Thanks! Great suggestion. One thing I always wondered if I'll be able to afford to buy a home or invest in something big at my salary if I max out my 401k.

If I max out at $18k, I have $64k in income left before taxes. Then $13.2k/yr for rent after taxes.

Off the top of my head, I have the aim to save $60K within the next 4-5 years, for home/investment property which means I need to save over $20K/yr.

I'm open to strategies and resources you al have used to accomplish your saving and investing goals. Also let me know if my thought process needs adjusting.
Oh man - thats a hard one. Usually its harder to pursue two goals at once. I typically fail when I do more than one thing at a time.

I like the idea of owning your own home. Guru's like Robert Kiyosaki and Grant Cardone will tell you that owning a home isn't a good move, but the data don't play that out. Homeowners typically have net worths that are substantially higher than non-homeowners. So, I'd get a place as soon as possible. That way you'll diversify, get tax benefits and have an asset that can appreciate in value.

You could work your investments - looking at the funds you're holding to lower their fees. That might help improve your returns on that end.

One thing I think is true: money accrues to people who take care of it, so just going through the process and having these discussions will likely benefit you in the long run.
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