Fiscal Cliff

[Vpxggmr17]

So I just wanted some feedback on what my backup plans should be. First, a little back story:

It seems that my boss has become very concerned that our department may come under the knife if sequestration occurs. Not sure that there is merit to that, but considering we are part of a defense contract, the chance is absolutely feasible.

Currently I earn $45k at my job here and I take home about $30k from a restaurant job I work nights and weekends. I started working the second job to pay off student loans and am about two months away from having enough cash to cut a check and be done with them.

Oddly enough, 2 months is about the mark for the "fiscal cliff" as it's being called.

I have begun an initial job hunt to possibly stay ahead of this thing and also as a secondary plus, step up in my career (still getting started as I'm 24 years old).

The last thing I want is to pay off these student loans and then 2 weeks later be told I'm out of my primary income. If I am in fact cut, I do have the secondary income to fall back on but that will only cover my current expenses (barely). So I'm sort of at a loss for what I should be doing.

It's a very unnerving feeling to realize that your income/livelihood and career growth depend on the dysfuntion of Congress and the President. Any perspective would be greatly appreciated!

[siggy_freud]

I wouldn't worry TOO much about things taking a dive at the start of the year. The financial markets may tank a bit due to concern, but there is nothing that says that the 10% cuts need to be realized immediately. Just like any budget, they'll probably load cuts into the back end and push off taking them as long as possible, especially with the assumption that Congress eventually will come to an agreement. Not to get political, but there are more Republican priorities on the chopping block than there are social programs, which Democrats tend to favor more. I expect we'll see movement on the issue after the new year. We'll technically begin to fall, but it's not the falling that will hurt. It's the smack when you hit the bottom, and I don't think that will happen within the next 2-4 months.

[feh]

So I just wanted some feedback on what my backup plans should be. First, a little back story:

It seems that my boss has become very concerned that our department may come under the knife if sequestration occurs. Not sure that there is merit to that, but considering we are part of a defense contract, the chance is absolutely feasible.

Currently I earn $45k at my job here and I take home about $30k from a restaurant job I work nights and weekends. I started working the second job to pay off student loans and am about two months away from having enough cash to cut a check and be done with them.

Oddly enough, 2 months is about the mark for the "fiscal cliff" as it's being called.

I have begun an initial job hunt to possibly stay ahead of this thing and also as a secondary plus, step up in my career (still getting started as I'm 24 years old).

The last thing I want is to pay off these student loans and then 2 weeks later be told I'm out of my primary income. If I am in fact cut, I do have the secondary income to fall back on but that will only cover my current expenses (barely). So I'm sort of at a loss for what I should be doing.

It's a very unnerving feeling to realize that your income/livelihood and career growth depend on the dysfuntion of Congress and the President. Any perspective would be greatly appreciated!

Don't pay off the student loans unless you know your job is safe.

[BMEPhDinCO]

If you don't have a 6 month EF you need to focus on that before the loans, even though I know it would feel great to be done with them!

Then, get back to the loans and keep up the job hunt on the side. It doesn't hurt to look around, but don't panic until you hear more. The doomsayers are out but that doesn't mean we're all about to fall down the side of a cliff!

[SavingSweetOneL]

VP...

Just want to encourage you to hang in there. This will work out, and if you ask, or have it in ypur consciousness, it can work out to your highest and best advantage.

My friends and I have a saying: "This or soemthing better. Thank you."

There are many reasons that can go deep, as to why events happen in our lives. Look for the silver lining and focus on the good that is.

SweetOneL

[Vpxggmr17]

If you don't have a 6 month EF you need to focus on that before the loans, even though I know it would feel great to be done with them!

Then, get back to the loans and keep up the job hunt on the side. It doesn't hurt to look around, but don't panic until you hear more. The doomsayers are out but that doesn't mean we're all about to fall down the side of a cliff!

Well, my current loans total about $13,000 and I have $12,000 in cash right now. That said, I wouldn't cash out and leave myself with nothing. So I guess you could say I have a 6 months emergency fund right now but I would be liquidating that to pay the loans when the time comes

And in regards to the job hunt, I'm currently pursuing a position that would pay close to what I'm making from the two jobs so that is incentive in itself but I just want to play things safe in case I start hearing louder whispers about defense cuts.

[snafu]

Some of us have tightened our belts a notch more aware of impulse spending. I'm sure you will be so busy with 2 jobs over the holiday season that you'll barely have time for frivolous spending. Are your SLs still in deferment? What interest rate? What will you save in interest by having one payment go directly towards principal while the monthly payment remains in place? Why must it be an all or nothing?

Adding good wishes so that you are the candidate chosen for the new job with better pay.

[Vpxggmr17]

Thank you for the best wishes, especially with the potential new position.

I currently pay about double what the monthly minimum is on the loans. I owe $11,700 on a 7.9% and $1300 on a 4.5%. So I will obviously owe less when I do have enough to cut a check and be done while still preserving some cash balance.

[creditcardfree]

We are military, and while I know my husband's pay will not be affected, it can have real impact in many places. I would highly suggest, paying the minimums until at least after the first of the year, or once you have been at your new job for a month or so...which ever comes first.

You really want to keep cash on hand when you see a storm on the horizon...you can pay off your loans pretty quickly once you know things are more stable.

That is what I would do!

[BMEPhDinCO]

You already have $12k in savings, so kill the $1,300 loan right now. That'll give you a "win" without hurting the bulk of your savings.

How much are your monthly expenses at minimum? Multiply that by 6. You CANNOT spend this amount. You can't drain it to pay for SL. You can't borrow from it for other costs. You should forget about it unless something really, really bad happens (job loss, cancer diagnosis, funeral for family..).

Then, start saving up to pay off the other loan and your car and whatever else you have. No one expects a student to pay off the loans immediately, just make the payments while saving up for other things and paying other debts or enjoying life (a little bit).

If you can save $300 a month in addition to other goals, you can drop $3,600 on the loans at the end of the year. Do this for 3 years and your loans will be gone. Look forward long term, keep an EF, and you'll be fine.

[Vpxggmr17]

You already have $12k in savings, so kill the $1,300 loan right now. That'll give you a "win" without hurting the bulk of your savings.

How much are your monthly expenses at minimum? Multiply that by 6. You CANNOT spend this amount. You can't drain it to pay for SL. You can't borrow from it for other costs. You should forget about it unless something really, really bad happens (job loss, cancer diagnosis, funeral for family..).

Then, start saving up to pay off the other loan and your car and whatever else you have. No one expects a student to pay off the loans immediately, just make the payments while saving up for other things and paying other debts or enjoying life (a little bit).

If you can save $300 a month in addition to other goals, you can drop $3,600 on the loans at the end of the year. Do this for 3 years and your loans will be gone. Look forward long term, keep an EF, and you'll be fine.

My expenses (Maximum) are roughly $2700 a month, including student loan payments. So around $16,000 for an EF which I don't have yet (thought I will by the end of December). Job loss would be the only thing I have to worry about at my age (though I am conscious of other random possibilities) and like I said previously, I have the second job as a fallback option to support myself though my saving/debt removal abilities disappear with the loss of my primary job in the defense contract world.

I agree with you that I should knock out the small $1300 loan quickly and I will do that very soon. What I can probably do is stash money till June, have enough for my 6 month EF and then pay off the second, larger student loan. That would just leave my vehicle as my last debt towards being completely debt free (I haven't bought a house yet; waiting 5 years or so). Right now I save $2000-2500 a month, so as long as I'm able to keep both jobs, that should continue unaffected. Obviously that being disrupted is my concern.

[Ramose]

I would just put the money into savings. You are much better off paying your loans later rather than paying them now and then having to go into high interest credit debt to survive a job loss.

Just wait for a few months until you know more about your situation.