Lookin for some advice.

[seekingKNOWLEDGE]

Its sad that people come for advice, but don't want to listen.

I don't think the case here is that i don't want to listen. If i wasn't going to take into account the answers i was given, like them or not, then i wouldn't have posted at all. I felt if I could make all my monthly expenses, and have money left over; then i wasn't living beyond my means.

Thnaks

[creditcardfree]

I don't think the case here is that i don't want to listen. If i wasn't going to take into account the answers i was given, like them or not, then i wouldn't have posted at all. I felt if I could make all my monthly expenses, and have money left over; then i wasn't living beyond my means.

Thnaks

It is good that you have money left over each month. It would be far worse not to be able to make your payments.

It is important to know the full cost of what your are buying, not just in terms of whether you can meat the monthly payment. For example, you stated that in 5 years you will have $60K (5yr*12K)in student loans. Unfortunately, we all seem to know someone who kept going deeper and deeper into debt simply because they could meet the payments. Then when a job loss or some other unforeseen financial event happens, the income is lost that one depended on to make all of the monthly payments. So, as a result, we tend to be a little conservative on this board, which means the less debt, the better!

Will your car and bike be paid off before your student loans come due? What are your other goals? Do expect or want to own a home? Think about the next 5 to 10 years and have a bit of a plan.

You have an emergency fund of $5-6K. That is a great start.
You are saving for retirement. Also excellent.

Now make a plan to pay off debt you do have before the student loans come due. And in the meantime, try not to add any more debt to the list, since it could take awhile to pay off $60K.

Personally, I think it is fine to have a brokerage account with $1K. It's a good way to get your feet wet. However, make sure you understand what you are investing in. Take the time to do the research, know the costs of the investments. Understand your risk tolerance. I wouldn't add much more to the brokerage account, until I at least had a plan to pay off debt.

[seekingKNOWLEDGE]

It is good that you have money left over each month. It would be far worse not to be able to make your payments.

It is important to know the full cost of what your are buying, not just in terms of whether you can meat the monthly payment. For example, you stated that in 5 years you will have $60K (5yr*12K)in student loans. Unfortunately, we all seem to know someone who kept going deeper and deeper into debt simply because they could meet the payments. Then when a job loss or some other unforeseen financial event happens, the income is lost that one depended on to make all of the monthly payments. So, as a result, we tend to be a little conservative on this board, which means the less debt, the better!

Will your car and bike be paid off before your student loans come due? What are your other goals? Do expect or want to own a home? Think about the next 5 to 10 years and have a bit of a plan.

You have an emergency fund of $5-6K. That is a great start.
You are saving for retirement. Also excellent.

Now make a plan to pay off debt you do have before the student loans come due. And in the meantime, try not to add any more debt to the list, since it could take awhile to pay off $60K.

Personally, I think it is fine to have a brokerage account with $1K. It's a good way to get your feet wet. However, make sure you understand what you are investing in. Take the time to do the research, know the costs of the investments. Understand your risk tolerance. I wouldn't add much more to the brokerage account, until I at least had a plan to pay off debt.

My bike loan will be paid off by the end of the year, and then I think the car should be paid off within the 24 months following that. So yes, my car and bike will be paid off about 2-3 years before the school loan payments are due. I wanted to then invest in something somewhat safe, but can return more than inflation. That way when it is time to pay the school loans i will have a significant sum to put towards it. As far as a house, i don't think i will ever own one. Unless I get significantly more wealthy, or it is a rental property.

Thank you

[disneysteve]

Car payment- 310
Bike payment- 110

When buying a car, if you must borrow money, the guidelines are to borrow for no more than 3 years with a payment not exceeding 10% of your monthly income.

Car: $310 = 15.5% of take home
Bike: $110 = 5.5% of take home

Total vehicle payments = 21% of take home, more than double the recommended debt limits. So I stand by my initial comment. You bought too much car for your income and the bike just further aggravated the situation.

You have a total of $7,000 in savings and you owe about what the car is worth. Sell the bike (I don't know what that's worth). Sell the car. Take up to $5,000 cash and buy a car, leaving yourself a few thousand dollars as an emergency fund. You can then use the $420/month that was going to debt payments to rebuild your savings. If you get yourself debt-free now, when the student loans come due, you'll be in far better shape to start attacking them.

[littleroc02us]

My bike loan will be paid off by the end of the year, and then I think the car should be paid off within the 24 months following that. So yes, my car and bike will be paid off about 2-3 years before the school loan payments are due. I wanted to then invest in something somewhat safe, but can return more than inflation. That way when it is time to pay the school loans i will have a significant sum to put towards it. As far as a house, i don't think i will ever own one. Unless I get significantly more wealthy, or it is a rental property.

Thank you

Then I would go back to my original post and that should take care of things.

I would lower your 401k match to 4%, that will give you an extra $40 a month which is $480 a year, that's $1920 after 4 years, put that money towards your debt. Tackle the Bike first with your 5k you have in savings, so that leaves $2300 and put that towards the car which leaves just under 10k. If you put $440 towards your car at 10k it will be paid off in 22 months. Enough time to save $11440 in 26 months putting away $440 a month, that pretty much takes care of most of the school loan.

[creditcardfree]

My bike loan will be paid off by the end of the year, and then I think the car should be paid off within the 24 months following that. So yes, my car and bike will be paid off about 2-3 years before the school loan payments are due. I wanted to then invest in something somewhat safe, but can return more than inflation. That way when it is time to pay the school loans i will have a significant sum to put towards it. As far as a house, i don't think i will ever own one. Unless I get significantly more wealthy, or it is a rental property.

Thank you

Stocks should keep pace with inflation. However, I would not invest in stocks, if you have plan to use the money to pay off debt in 5 years. Your time horizon for stocks should be 10 years or more. CD's would be much safer...not sure if they will keep pace with inflation.

When you pay down debt early, you are effectively investing in debt and the the return is the interest rate on the loan. So, paying your car off earlier will give you a 4% return or saving you 4% which you could then save towards student loans.

It's great that you are thinking about how to pay off your student loans when the time comes, especially considering the amount you are taking out. I'm wondering if you have run calculations on your current debt. Have you used online calculators to determine how quickly you could pay off the debt you have and how much it would save you? This SA calculator might help. Check the box at the bottom of the calculator so you can see how much interest it saves you each month. Play with the monthly amount to see how quickly you could pay the debt off. Add the bike payment to the car payment after its paid off to pay off the car faster. The calculator can help you see how fast you can pay it off. After those are paid off, you will have over $800 month to put towards your student loans.

[jpg7n16]

My bike loan will be paid off by the end of the year, and then I think the car should be paid off within the 24 months following that. So yes, my car and bike will be paid off about 2-3 years before the school loan payments are due.

So by the end of the year, you mean in the next 8 months? Over that timeframe, you'd have to pay $347/month and you'll pay about $76 worth of interest. If you paid it all off today, you'd be $76 richer at the end of the year.

I would pay off the bike today, not wait 8 months.

[Frugal]

In my OPINION, I would not take out a loan on a car. Ever. Period. I saved money by biking two miles each way from off-campus to my college campus. I staying in shape, built my credit score through the appropriate use of credit (e.g., only in emergency, although I did have student loans), and also avoided further debt. Student loan debt is bad enough, as it is! I am still paying off mine, and I was in college for just over 5 years. Unless you are virtually guaranteed a high-paying job, say as an engineer, when you get out of school, in my opinion, it is best to avoid debt at all costs.

[jpg7n16]

In my OPINION, I would not take out a loan on a car. Ever. Period.

Although that's likely good advice going forward, it's a little late for that.

Since OP already has the loan, what would you suggest he do now?

[seekingKNOWLEDGE]

Thank you, everyone, for their thoughts and advice. I really appreciate you all taking the time to considerably respond. I am going to take a few days and go over all the numbers, and suggestions. I will update soon.

Thanks again,
-Seekingknowledge-

[DebbieL]

If you owe 2.7K on the bike and your monthly payment is $110, how will it be paid off by the end of the year? Are you planning to pay extra on it, or did I miss something?

[jeffery12]

please make sure to have a health insurance

[wincrasher]

I think the OP is in good shape considering his age and having no family obligations.

Granted, selling off his car and bike would certainly free up cash flow, but I don't see that he's in a desperate situation. $12k is not much of a car. If he plans to keep it till it dies, then he should proceed that way. The bike is not that much money either - and that is something that you really can keep for many, many years and enjoy.

I'd recommend, as others have, of saving for your student loans payoff. When they are due, you may consider paying them or not, depending on your tax situation. IF they are deductible, there may be better uses for your money. Keep plugging away at your EF, and avoid any risky investments.

Many people come on these forums in dire straits, unable to pay their bills and looking at homelessness. In those cases, desperate actions are needed. I don't see that here.

Thankfully you have no CC debt. You bike loan is high, but the term and amount is short.

I don't see much money in your budget for the ladies/bars/etc. I suspect you spend some money on such things, considering your age. To me, the biggest financial risk for a guy your age is starting a family before you are ready - it's very hard to recover from that.

Good luck.