Student Loan and Saving

**kork13** · 04-02-2009, 03:19 PM

Originally posted by skives View Post

Here is a little run down on my situation. I have a private student loan that has a balance $34206.56 and a interest of 4.98% that changes every three months. Starting this month I am paying $500 a month on it which is a little over one hundred more than the payment. I also save $250 a month into a savings account. I am wondering if I should continue to save or put more money on my student loan or save more money?

Paying down debt is important, but it's also very important to have cash savings. If you're making double-payments on your SL's as it is, keep with your current pace of saving. Security is worth dragging out a loan for a little longer, IMO.

**jIM_Ohio** · 04-02-2009, 05:14 PM

Kork gave decent advice. Nowhere did you post if you were saving for retirement, what your budget looked like and the amount IN the savings account.

Is 15% of your gross pay going to a retirement account (IRA, 401k or other)?
Do you have 3 months expenses in cash?
Do you have a budget?
Do you have other debt (like a car payment or cc)?

All of the above should be done before you pay extra on the SL debt.

**faithman1012005@yahoo.com** · 04-02-2009, 11:24 PM

I don't know your full situation, but if it were me I'd make sure my smaller debt, cars, credity cards etc... were paid off first. Then I would make sure I had about $1,200 in emergency cash in a money market account, and if possible 3-6 months income set aside, as well as set at least 10% of my income to go into a retirement account. Then I would take any extra and dump as much as possible toward atacking the larger debt. Good luck!

**skives** · 04-03-2009, 01:55 AM

Additional info

I put 12% of my gross pay into a 401k. I have an emergency savings with $1,000. I have another savings with $4,000 in it and put $250 a month in it. I have no other debt besides a federal student of $33,000 but my payments on that are going to go soon because of a new payment plan. However I only make $13.40 an hour for 40 a week plus any overtime I get. That should help out.

**skives** · 04-03-2009, 11:35 AM

Additional Info

I meant to say are going to go down when I switch into the income based repayment to around $70 a month for the federal student loan.

**maat55** · 04-03-2009, 01:45 PM

If you are secure in your job, and do not have any important expenses(house,car) in the near future, I would put the 250 towards your SL.

You will save 4+ interest as apposed to earning 1 to 2%.

**atsgreig** · 05-03-2009, 10:46 PM

Originally posted by maat55 View Post

If you are secure in your job, and do not have any important expenses(house,car) in the near future, I would put the 250 towards your SL.

You will save 4+ interest as apposed to earning 1 to 2%.

i am agree with maat. it's also very important to have cash savings.

Student Loan and Saving