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Savings/Debt-repayment with a job upgrade on the horizon

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    Savings/Debt-repayment with a job upgrade on the horizon

    Hi everyone,
    I'm new here, but i'd love to get some advice from you seasoned posters.

    I'm trying to devise a saving/debt-repayment plan that will allow me to reach my goals of home ownership and not worrying about my finances too much. Here are the details:

    Graduate student in biochemistry (2 years left)
    $2300 take-home pay/month
    $750 rent and utilities/month
    $50 cell phone/month
    $75 car insurance/month
    No credit cards debt!
    No car payments (2004 Pontiac Grand Am, 40,000 miles)
    $30,000 in subsidized student loans (no interest until I finish school)
    $3000 in checking
    No savings/retirement/emergency funds

    When I finish up school, even with an "average" job in my field, I expect at least a 2X increase in salary per month, possibly even 3X. Of course, this is coupled with a 75% increase in housing costs (moving from Nashville to Washington DC, Boston, Chicago, or New York)

    My question is this: Should I start paying off my student loans now, or should I start aggressively saving (emergency fund, 6 months living expenses, IRA, retirement)? A combination of the two?

    I'm leaning towards aggressive saving, and beginning loan repayment when I get that salary bump. DR says to pay off the debt, but I'd rather have money in savings and in retirement accounts to take advantage of compound interest while I'm (relatively) young.

    What are your thoughts?

    Emergency fund first. Then I'd split saving efforts between a Roth IRA and a money market. Take advantage of the no interest on the SL and save money in a MM acct that will be applied to knocking down the principal on the SL upon completion of your two years.


      If you pay the student loans off now, you are effectively getting a 0 percent interest rate, right?

      EF, then student loans to keep repayment period short.


        I would do a 6 month EF and then focus on retirement. Once you get the bigger job you have then focus on the student loan


          I agree the EF comes first. You might need a cash cushion after you finish school to help you find a job and get settled in a new place. If you have extra, you can do what Jim says and make a big initial payment on the student loans.

          Your monthly fixed expenses are $875, but you haven't included utilities, food, entertainment, clothing, transportation, etc. You need a more accurate idea of what your expenses are so you can figure out how much you can save, and ways to cut back on spending to save more.