College Student debt

**Eagle** · 09-29-2014, 06:15 AM

Originally posted by BluePants View Post

Hello! I've been lurking here for a little while and I'm seeking some advice. I'm 21 years old, I'm a sophomore in college, I'm a server at a restaurant. So my situation right now looks good but I'd like some advice to maybe better my future situation.I have about 20k in debt. 12k in auto loan at 10.55% and 8k in student loans at about 5%. My student loans are automatically deferred because I'm enrolled in college. My car loan is 231/month, I pay about 250/month. I want to refinance afer I improve my credit score. I have no cc debt. I have $400 IN MY IRA which i started in august. I have about $500 in savings in high yield accounts, and 1k in my checking account. I bring home at least $1600 if not more, my budget is set for $1600. My essentials are $250 for rent(live with mom, dad passed away and help pay bills), $250 for car, $125 for car insurance, $190 for health insurance, $65 for cell phone. and $300 for saving and investing($100 into a vacaion fund for when i graduate college, and $200 for IRA). I had about $4k saved after I spent all my money on a certain plant when i was younger but put that all down on a new car so i can drive to school everyday which is about 45 miles a day. Right now I am trying to increase my emergency fund to $7k by the end of 2015 which would be about $431 a month. I go out a lot which i can cut back and my hobby is video games which i can easily drop $2-300/ month on. My monthly income will increase the rest of the year as we approach the holiday season. I will take home approximately $2-2500 from oct-dec

Am I in a good situation or am i setup for failure?

Welcome to the forums!

Re: Work & College
I think it's great you are working through college. How much in student loans do you project you'll have by the time you graduate? What will be your major?

Consider websites like www.payscale.com for comparing job profiles to the salaries of people with comparable skills and experience.

Also check out www.indeed.com to look average salaries by job title.

Check out this link on May 2013 National Occupational Employment and Wage Estimates and the �Annual Mean Wage� column or click on a specific occupation title for more details.

**Eagle** · 09-29-2014, 06:26 AM

Originally posted by BluePants View Post

Am I in a good situation or am i setup for failure?

Re: Expenses & Budget
It really depends on your priorities. So you save $500 a month between your savings, investing, and "vacation" fund. Going out and video games are entertainment. Budget a reasonable amount and then put the rest towards either your emergency fund or your debt.

If it were me I'd pay off that car loan ASAP. Anything extra you make in the holiday season I'd put towards that car loan. 10.55% interest for an auto loan seems expensive. Have you calculated how much interest you are paying a month and a year respectively on this loan?

**BluePants** · 09-29-2014, 08:18 AM

First off thanks for the reply eagle.

By the time graduate college I plan on getting anywhere from 15-30k more in student loans. Because of my mother and my situation the government thankfully pays half my tuition right now in the form of grants. I'm majoring in Finance with a minor in accounting. Then my plan hopefully is find a company that will help finance a masters program. However if i do exceptionally well in school this year there is always a chance for scholarships.

As for my car I just made my first payment and I paid extra. Right now I'm only paying a little extra. My main focus is an emergency fund. I don't know if you've ever worked in the restaurant biz but the turnover rate in incredibly high. Once I get my ef funded I can throw large chunks of money at the loan. I really didn't have a option or the car. My car's engine blew on my way to school one day and I have class mon-fri so I needed a car asap. The interest rate came as a surprise. My credit score was way lower than i had expected. The loan is for 6 years(I know way to long). I plan on refinancing in about 1 yr, 1.5 yr when and if my credit improves and cut the term down.

And for the interest paid per month/year I don't even want to know, I know its a stupid amount. It's something like 4k and change over the life of the loan.

**Eagle** · 09-29-2014, 01:42 PM

Originally posted by BluePants View Post

First off thanks for the reply eagle.

By the time graduate college I plan on getting anywhere from 15-30k more in student loans. Because of my mother and my situation the government thankfully pays half my tuition right now in the form of grants. I'm majoring in Finance with a minor in accounting. Then my plan hopefully is find a company that will help finance a masters program. However if i do exceptionally well in school this year there is always a chance for scholarships.

As for my car I just made my first payment and I paid extra. Right now I'm only paying a little extra. My main focus is an emergency fund. I don't know if you've ever worked in the restaurant biz but the turnover rate in incredibly high. Once I get my ef funded I can throw large chunks of money at the loan. I really didn't have a option or the car. My car's engine blew on my way to school one day and I have class mon-fri so I needed a car asap. The interest rate came as a surprise. My credit score was way lower than i had expected. The loan is for 6 years(I know way to long). I plan on refinancing in about 1 yr, 1.5 yr when and if my credit improves and cut the term down.

And for the interest paid per month/year I don't even want to know, I know its a stupid amount. It's something like 4k and change over the life of the loan.

You are actually doing pretty good then.

Sounds like you have a plan and a good head on your shoulders. I can relate to your situation. I bought a car that I needed for school at 9% interest. I also worked in retail for a long time so I can relate to the high turnover rate in the food industry.

Assuming the 30k number for the remaining 3 years of college you should be able to finish with less than 50k worth of debt. I imagine a starting salary for a finance major would be 40-50k range. Most people recommend not having more than your first year's salary worth of loans. If you can save and pinch the numbers you should be able to end up with say 30-40k right?

What are your options for working during the summers and/or getting an internship? That would be both beneficial to your finances and to your career.

**snafu** · 09-29-2014, 04:29 PM

Welcome to SA. I hope you'll find our comment helpful and look forward to learning your thoughts. I admit to being surprised that as a student in finance, you'd avoid knowing how much interest has been added to your car loan. With interest on savings paying less than 1% it's discouraging to learn you are being ripped at 10.55%. What is the negative on your credit rating? Is it merely inexperience? At that rate, I'd temporarily stop contributions to an IRA [unless you are capturing an employer's contribution] and throw $200. + extra holiday earning directly to the principle to compensate. Typically, extra car payments merely pay sums forward unless specifically notated.

At some point in the future, I hope you'll check rates at a nearby Credit Union as they often charge better rates. As a member of a CU, there is often a rebate shared by members.

**sblatner** · 09-29-2014, 10:04 PM

I just want to say that I hope our 19 year old and 16 year old sons are as financially responsible as you. I would say most 21 year olds don't care about emergency funds. Good for you!

**BluePants** · 10-01-2014, 08:08 AM

@ Eagle
I am not able to get an internship as I am not technically in my program yet. Still doing the pre reqs. I started as a physics major when I was 18 and after thinking it over I changed to finance. I am able to pick up more hours during the summer, however I am interested in summer classes at this point so i can graduate before I'm 26. And all things considered if I make my "average" income although it does fluctuate I am on pace to have my car paid off in 3.5-4 years without refinancing at some point it could be sooner. So my only debt should be my student loans.

@ snafu
My credit rating is bad because a few years ago I was not aware that my loans had come out of deferment because I didn't enroll in school, I wasn't signed up for paperless bills and one was never sent to me, no emails, nothing so I missed two payments, one on each loan, I only have one credit card(only 7 months old), and no other credit. My loan is through Capital One and they were the only lender that would finance me without a co-signer(which I did not have). ANd through Capital One every extra cent is applied towards the principal, they don't have a pay it froward policy. And like a said earlier as soon as my credit increases I will shop around for a refinance. With relatively low bills as long a I track my spending and not go out after every shift I can easily make up that $200 from my IRA.

@ sblatner
Thanks! I gotta say out of my siblings, my coworkers(anywhere from 16-40), and my friends I'm one of the few people who think about these things. My father was an accountant and during my childhood he actually taught me very little about finances. I had to figure all of this out myself mainly through these kinds of forums and internet research. If you sit down and talk to your kids about it I'm sure they will at least have it in the back of their minds and at most practice good savings, and spending habits.

**YolandoAmaya** · 10-13-2014, 01:21 AM

It is good that you are working also in college. Hope you will pay your student loan no needs to worry, there is some time to pay it and if you are not able to pay it on time then you may also get some more time.

College Student debt