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    Help with making financial decision stu loan!

    I am new to this forum and I am actually looking for some advice. Thank you all in advance for all your advice and support.
    Here is my situation.
    I make 1700 monthly after tax.
    Total student loan Amount Owed as off today: $127,642.84, making monthly payment of $587.66 or $587.68 depending on the month. The APR on the loan is now 1.875% for the remaining life of the loan. Thank you Lord!
    Here are my monthly expenses:
    Student loan $587.68
    Gas $40 every 2 weeks
    Tithe to church $20 every 2 weeks
    Telephone between $80 to $90 every month
    Car insurance $456 every 6 months
    Thus I save $80/ month so I can pay the full amount every 6 months instead of every month
    Making my total expenses to be $800/ month
    I have NO cc debt

    I live at Home for now therefore very grateful for parents and contribute every now and then as they want me to focus and pay off student loan!!!!

    I have some savings ( i am 36 yo, single graduate student) and they are as followed:
    $6200 distributed bewtween Roth and traditional Ira. I contribute $60 to the Roth each month. I don't add anything to the traditional.
    $47491 in savings @ 0.80% monthly.
    I have been saving so I can reach a point where I can pay off the stu loan and use a portion to buy my own home in the future.
    I can also mention that I have just decided to save $760 a month

    Now that the APR has gone down to 1.875%, than you Lord all Mighty , God knows I need this break, I am planning on rounding up the stu loan payment to $600 and add an extra $100 each month making the total payment $700 monthly.

    In a nutshell I would be paying $700 towards the student loan and save $760 monthly, leaving me to live on $40 monthly.

    Can anyone help me out and let me know if I am doing this properly?
    Am I on the right track?
    Should I be paying more towards the stu loan ( knowing that with earning .80% in savins and paying off 1.875% in interest, i am loosing 1%) or continue to build up cash up to the point that I can pay off? I have also learned that in this economy CASH is KING!

    I totally dislike having debt! I feel like a slave and I am ready to be lender instead. And yes, I am guilt of listening to Dave Ramsey and I have read one of his books actually. I think that is what pushed me towards this. I feel like I had an epiphany once the APR went down to 1.875%.

    Can someone please tell me if I am on the right path or is there another way of doing this that I am not aware of.

    Thank you agin so much all of you.

    #2
    Would it be rude to ask what you do? Why do you only make $1700 and have $127k student loans? Perhaps a new job?
    LivingAlmostLarge Blog

    Comment


      #3
      Similar situation

      I hate debt like you do. Instead of building up cash reserves (besides a 3-6 emergency fund) I would take most of the cash and put them to toward your student loans. I'm not sure if you have multiple student loans or just one, but if you have multiple from different lenders, paying off a large chunk of the SL's should lower your monthly payment which will allow you to allocate more funds to paying off your debt.
      Also, your paying more in interest, even at your low rate, than you are gaining by keeping this money liquid and collecting interest.
      Bottom line, I would keep 8-10k as an emergency fund and not hesitate to payoff a large chunk of the student loans.

      Comment


        #4
        Actually jbings4, my loans were consolidated so it is just one big loan divided between subsidized and unsubsidized. I pay to one lender the 587.68 monthly.
        Thank you so much for your advice.
        My monthlly income is temporary and by next year, God's willing it will triple and continue to increase from then on.
        I just wanted to have an action plan even in the situation that I am in right now, and continue to pay it off until I have one big enough lumpsum to pay it off. Because right 40000 towards 127000 is not enough. I would still have 80000 to deal with.
        I had also ask the lender if a big chunk were given if it would change my monthly payment, they said it would not make a difference not until I hit the 20000 basically close to the end of the loan itself. but I have faith that it will get paid off sooner than later... I just have to and I will get there.
        Again thank you for the advice

        Comment


          #5
          Pay the minimum. There is no incentive to pay more now, at that interest rate and on such low income. Put some more towards retirement if you desire because you have some catching up to do. With an interest rate that low, I'd say max out retirement accounts and other savings before throwing more at the loan.

          Comment


            #6
            Originally posted by green_goblin12 View Post
            Pay the minimum. There is no incentive to pay more now, at that interest rate and on such low income. Put some more towards retirement if you desire because you have some catching up to do. With an interest rate that low, I'd say max out retirement accounts and other savings before throwing more at the loan.


            Green-goblin, why do you think that there is no incentive to pay more now with the temporary low income? Both the Roth and traditional are in money market but not in stocks. I am very conservative and have learned along the way, never to do anything that I don,t understand, and so far, I have yet to understand anything in the stocks but arrows going up and down.
            And you do understand that the loans have to be repaid no matter what and the longer I take, the more I will pay in interest.
            Thanks for your advice as I am on a journey to learn so much more about the financial world.
            I am so elated to have found this website.

            Comment


              #7
              Originally posted by Savingbtime View Post
              I am new to this forum and I am actually looking for some advice. Thank you all in advance for all your advice and support.
              Here is my situation.
              I make 1700 monthly after tax.
              Total student loan Amount Owed as off today: $127,642.84, making monthly payment of $587.66 or $587.68 depending on the month. The APR on the loan is now 1.875% for the remaining life of the loan. Thank you Lord!
              Here are my monthly expenses:
              Student loan $587.68
              Gas $40 every 2 weeks
              Tithe to church $20 every 2 weeks
              Telephone between $80 to $90 every month
              Car insurance $456 every 6 months
              Thus I save $80/ month so I can pay the full amount every 6 months instead of every month
              Making my total expenses to be $800/ month
              I have NO cc debt

              I live at Home for now therefore very grateful for parents and contribute every now and then as they want me to focus and pay off student loan!!!!

              I have some savings ( i am 36 yo, single graduate student) and they are as followed:
              $6200 distributed bewtween Roth and traditional Ira. I contribute $60 to the Roth each month. I don't add anything to the traditional.
              $47491 in savings @ 0.80% monthly.
              I have been saving so I can reach a point where I can pay off the stu loan and use a portion to buy my own home in the future.
              I can also mention that I have just decided to save $760 a month

              Now that the APR has gone down to 1.875%, than you Lord all Mighty , God knows I need this break, I am planning on rounding up the stu loan payment to $600 and add an extra $100 each month making the total payment $700 monthly.

              In a nutshell I would be paying $700 towards the student loan and save $760 monthly, leaving me to live on $40 monthly.

              Can anyone help me out and let me know if I am doing this properly?
              Am I on the right track?
              Should I be paying more towards the stu loan ( knowing that with earning .80% in savins and paying off 1.875% in interest, i am loosing 1%) or continue to build up cash up to the point that I can pay off? I have also learned that in this economy CASH is KING!

              I totally dislike having debt! I feel like a slave and I am ready to be lender instead. And yes, I am guilt of listening to Dave Ramsey and I have read one of his books actually. I think that is what pushed me towards this. I feel like I had an epiphany once the APR went down to 1.875%.

              Can someone please tell me if I am on the right path or is there another way of doing this that I am not aware of.

              Thank you agin so much all of you.
              OMG, what did you get your degree in for $127,642.84?

              Comment


                #8
                Originally posted by muexm View Post
                OMG, what did you get your degree in for $127,642.84?
                Medicine abroad and now working while studying for my boards

                Comment


                  #9
                  help

                  You have way too much debt.You need to get your education finished and pay off that loan once you start generating decent income.Focus on that and try to reduce your car insurance and if you have a car payment get rid of it and buy a car out right.Shop online for a better rate on insurance.There are was to save money and make your cash last longer.

                  Comment


                    #10
                    Originally posted by ledzepplin1966 View Post
                    You have way too much debt.You need to get your education finished and pay off that loan once you start generating decent income.Focus on that and try to reduce your car insurance and if you have a car payment get rid of it and buy a car out right.Shop online for a better rate on insurance.There are was to save money and make your cash last longer.
                    Thanks ledzeplin1966 for replying. I own my car outright and the insurance is actually the lowest out here in NY. Note that the monthly insurance is actually $76.66 (so I just save $80 monthly )making it $460 every 6 months! I have to work in the meantime, I have no choice until i pass the boards. Thank you so much again. In the meantime, my way of savings, is it the right way? I know that I received advice to allocate more money towards my Roth than the student loan since the APR was so low, but I kind of feel uneasy about that, knowing that a debt is a debt no matter what. The student loan is the ONLY debt that I have! I am learning my hardest to live below my means.... I have lost interest in shopping for a while now and I am focused on repaying debt. Please feel free to add further comments. It is deeply appreciated.

                    Comment


                      #11
                      i am actually thinking of attending the Dave Ramsey financial class, is it worth it as off my situation today? thank you. it is for $85.

                      Comment


                        #12
                        I strongly agree with Green Goblin. You are 36 with 6k saved for retirement. Have you run the numbers to see how much money you save by paying off those SL's early? I bet its not much at all. 1.85% is just too low of interest to pay off instead of investing in my opinion.

                        Comment


                          #13
                          Originally posted by Goldy View Post
                          I strongly agree with Green Goblin. You are 36 with 6k saved for retirement. Have you run the numbers to see how much money you save by paying off those SL's early? I bet its not much at all. 1.85% is just too low of interest to pay off instead of investing in my opinion.

                          Actually by rounding up the numbers to $700 a month with the wages of today, I will finish paying the student loan ONE YEAR earlier ( saving a littlte over $8000). As my wage will increase, so will both contributions (retirement and student loan).

                          Unless I am running these numbers all wrong, but this is what I am getting so far.

                          Can someone, please break it down for me further so I can see even clearer! Thank you so very much.

                          And as I asked before, would it be beneficial for me to take the Dave Ramsey class for $85? Again thank you for all your responses.
                          Last edited by Savingbtime; 04-29-2012, 06:45 AM.

                          Comment


                            #14
                            Ok, here are the numbers I got.

                            Paying no extra you pay off loan in 2035 and pay 29,593 in interest.
                            Paying 113 extra each month pays the loan in 2030 and 23,528 in interest
                            Paying 113 and 20k lump sum pays off the loan in 2027 and 16,234 in interest.

                            If you were to invest the same amount of money that you are planning to pay towards your SL's and you made 6% you would have 123,391 by 2035. So, the way I see it you could either invest that money and make over 100k OR pay off the loans and save about 13k.

                            My issue with your current plan is that you seem to be totally ignoring retirement right now and I dont see any reason that you wouldn't ignore it later too. Lets say it takes you 10 years to pay off your loan because you get raises and put that money towards the SL. By the time you are 46 you would still have under 10k in your retirement fund.

                            Comment


                              #15
                              Originally posted by Goldy View Post
                              Ok, here are the numbers I got.

                              Paying no extra you pay off loan in 2035 and pay 29,593 in interest.
                              Paying 113 extra each month pays the loan in 2030 and 23,528 in interest
                              Paying 113 and 20k lump sum pays off the loan in 2027 and 16,234 in interest.

                              If you were to invest the same amount of money that you are planning to pay towards your SL's and you made 6% you would have 123,391 by 2035. So, the way I see it you could either invest that money and make over 100k OR pay off the loans and save about 13k.

                              My issue with your current plan is that you seem to be totally ignoring retirement right now and I dont see any reason that you wouldn't ignore it later too. Lets say it takes you 10 years to pay off your loan because you get raises and put that money towards the SL. By the time you are 46 you would still have under 10k in your retirement fund.

                              Ok I am starting to slowly get it but where are you getting this 6% GUARANTEED return from? The retirement accounts are both in money market account and right now earning less than 0.80% that my regular savings are getting monthly.

                              If I can find anything with a guaranteed 6 %, that is where all my money would be going towards as we speak! And i'd be very elated! So please enlighten me further.

                              Thank you Goldy

                              Comment

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