What to do with Student Loans

**auron** · 03-30-2012, 10:07 AM

I am currently in the same situation, but with a larger principal. What's your income? What are your expenses? What are the SLs' interest rates? Are they variable or fixed? Are you contributing to a 401k? Does your employer match? What are your medium/long term goals (vacation/car/house)? Don't use all of that EF, it's a great safety net.

Without knowing more about your situation I can I only give my own situation as an example.

I have a net income ~$3700/mo, expenses ~$2400/mo, ~$8.5k EF (I'm okay with 3 mo EF), and contribute to max employer match on retirement. This leaves me with enough extra to pound away at my $36k of student loans with ~$1k payments.

**LMA** · 03-30-2012, 10:38 AM

If all you have in cash is the $16k in savings then I agree with you in not using it all but I would think 6 months worth is enough. However, based on particulars on your own situation then 8 months might be more suitable. If 8 months is not necessary then I would pay off as much of that loan as possible.

Yes you can get better than 6% in quite a few investments right now but the reality is that you have to take care of that loan at some point or another so paying it off as quickly as possible is the best choice so you can be debt free and then start putting money away for you.

**bjl584** · 03-30-2012, 10:40 AM

Originally posted by Jwilliamson22 View Post

I'm trying to decide what to do with my student loans. Currently I have about $16,500 in liquid cash accounts, and about 16k worth of student loans at 6% average. I know I cant make 6% on my money anywhere else, but I dont feel comfortable putting all my savings towards the loans.

I'm thinking I will put about 5k towards the student loans, keep 10k in savings for my emergency fund (8months of living expenses) and then put all extra every month towards the loans which should be 1000k+ per month towards the loans and hopefully have them paid off completely in 6-9months.

What do you think?

I like your plan. The only thing that would change my thoughts on it would be if you had some major purchase in the near to mid-term future. Something like a car or a house.

**Jwilliamson22** · 03-30-2012, 01:16 PM

Im salary plus comission somy income varies, but I've been averaging $3500 take home, and next month will be $4600

My expenses are bwtween 1300-1500 which leaves a lot of room to save and pay down the student loans, but should be able to do a minimum of $1000 a month toward them. Its a stable job, so there's no reason a need a huge EF other then it make me feel comfortable b/c if i DID get laid off jobs are scarce in my area. The though of buying a house sound great, but I will probably wait until after my student loans are paid off.

I haven't been in my position a year yet so there is no company match. I was contributing 10% until recently when I decided it was my focus to pay off the student loans first so I decreased to 2% because of no match.

Any recommendation on where to house my EF? currently its at ING earning .8%

What to do with Student Loans