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    pay off school loans or save for down payment

    helloooo everyone,

    I am new to this forum. thank you in advance for everyones feedback.

    I know that this question has been posted many of times and can probably be found on google also.. but everyone situation is different. would like some advice.

    My wife and I currently make a total of $108,000 before tax. our take home pay is $5,400a month.
    we have no other debt instead of school loans. total of $35,000 total. we make about a $500 dollar monthly payment.

    our living expensives per month

    rent: 1040
    all utlities and cable-185
    cell phone-145
    car insurance-187
    food and gas- 660


    whats left is 3,183
    then we put $300 into a personal EF that has about $6000 and slowly growing
    then we put about $2000 in a house downpayment savings.
    both of us put abuot 10 percent in 401 k

    we live on a pretty tight budget. to maximize our savings.


    no other debt.

    we have about 16,300 saved right now for our down payment for our house.. we're trying to get to 60,000 for a 20 percent down payemnt*(300,000 house)

    is it smart for us to take that 16,300 and just put it towards our school loans and make $2000 plus dollars payments per month and knock out all the loans by the end of this year 2013? to be finally feel what real freedom feels like. DEBT FREE..

    but starting from scratch again for house downpayment. we do plan on moving into a house by the end of 2014. we might not be able to save 20 percent. but able to save around 10 percent if we pay off our school loans. i know intrest for house might be more and including PMI. but by paying the school loan. we would have extra money to help with that.

    or is it smarter to save the money for the house? we dont make the best money.. but since we dont have any kids, we are thinking we should just wipe out the debt so in the future.. we have extra money for things like house maintaience,activities for the kids, etc...

    any advice would be apppreciate =)
    Last edited by thomasdan; 03-19-2013, 11:12 AM.

    #2
    I suggest to pay off the school loan by 2014. I think there will be provision to pay more and get the debt clear fast. By 2014, if you get it cleared then you can apply loans from bank. Home loans as compared to other loan has got a lot a flexibility.

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      #3
      are you talking about paying the loans off by the beginning of 2014? is that correct
      Last edited by thomasdan; 03-19-2013, 11:55 AM.

      Comment


        #4
        are you talking about paying the loans off by the beginning of 2014? is that correct

        thank you for replying.

        Comment


          #5
          If you guys are dead set on buying a house in the end of 2014 and the only way you'll be able to save up enough of a downpayment to cover 20% and not have to pay PMI is by focusing all your savings on the downpayment fund, I'd probably do that if I were you. Without actually crunching the numbers since I don't know your student loan interest rates, I think the money that you'd save by not having to pay PMI and the extra house interest would most likely outweigh the interest cost of delaying paying off your student loans by a year or 2.

          I know that many people on this forum are extra frugal and think that you should pay off all your debts before you purchase a home. But the fact that you have NO other debt besides student loans is already better than the average person. And I think that as long as you have a plan and manage your money well, there's nothing wrong with taking a slightly slower path to pay off student loans if it allows you to meet another major financial goal.

          Comment


            #6
            school loan break down:

            10,500- about 3.5 % *(wife)
            17,800- about 8.5 %
            6,700- about6.5 %

            does anyone know how much PMI is over the years if someone did at 3.5 FHA loan on a 300,000. i know it could vary cause of intrest. im not to sure on how the math works. anyone that is good at crunching numbers, please help..

            woould i be saving more money on the long run paying off the school loan now or does PMI end up being more than what i pay for my intrest on school loans. hope that makes sense
            Last edited by thomasdan; 03-19-2013, 03:31 PM.

            Comment


              #7
              so with alot of thought.. my wife and i decided to just be debt free first.. we just made at 17,800 payment to our school loans. 2 more loans to tackle.. thanks all

              Comment


                #8
                Originally posted by thomasdan View Post
                so with alot of thought.. my wife and i decided to just be debt free first.. we just made at 17,800 payment to our school loans. 2 more loans to tackle.. thanks all
                Hope you clear off all your debt by 2014 and start saving for the future.

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