Pay off student loan or increase retirement savings?

[markr867]

I know this topic has been discussed here a lot, but my situation is a little different.

I recently moved to Washington DC to start a job. I graduated last May with no experience in my field, so I had a very tough time getting a job. I landed an entry level job in DC and decided to take it for the experience, even though the pay isn't the greatest.

After I moved and realized things would be a little tighter than I thought, my parents called one day and offered to pay off my student loans and I could pay them back as much as I could each month and they would not charge me interest. I originally objected because I didn't want to take their money for a long period of time, but my mom insisted I do it or she would take care of it herself.

It's been hard to figure out my budget so far because I've had a lot of big one-time expenses (security deposit, buying furniture etc), but I think I've finally come to the conclusion that I'll have a couple hundred dollars left after accounting for everything (even things like going out, haircuts, dry cleaning, etc).

I'm currently saving around 10% of my income (between my 401k and a Roth IRA), and I'm paying $100 to my parents every month on my loan because that's all they would accept from me. The balance of the loan is $22,300.

So my question is.. should I take that extra couple hundred I have and boost my retirement contributions, or should I add it to the $100 I'm already paying my parents and pay them back faster?

[nick__45]

I know this topic has been discussed here a lot, but my situation is a little different.

I recently moved to Washington DC to start a job. I graduated last May with no experience in my field, so I had a very tough time getting a job. I landed an entry level job in DC and decided to take it for the experience, even though the pay isn't the greatest.

After I moved and realized things would be a little tighter than I thought, my parents called one day and offered to pay off my student loans and I could pay them back as much as I could each month and they would not charge me interest. I originally objected because I didn't want to take their money for a long period of time, but my mom insisted I do it or she would take care of it herself.

It's been hard to figure out my budget so far because I've had a lot of big one-time expenses (security deposit, buying furniture etc), but I think I've finally come to the conclusion that I'll have a couple hundred dollars left after accounting for everything (even things like going out, haircuts, dry cleaning, etc).

I'm currently saving around 10% of my income (between my 401k and a Roth IRA), and I'm paying $100 to my parents every month on my loan because that's all they would accept from me. The balance of the loan is $22,300.

So my question is.. should I take that extra couple hundred I have and boost my retirement contributions, or should I add it to the $100 I'm already paying my parents and pay them back faster?

How about you enjoy yourself and little and invest in your career instead of worrying your head off. The best trick to have more money in D.C. is to make more. Depending on your career path, most people in D.C. make about $90k-$150k in public sector and roughly 20-70 percents more doing the same thing in private sector. I am making $30k because I chose to stay out of D.C. but I am still doing alright. The cost of living and quality of life is much better here versus those 30-50 miles north. Of course, the people rich enough to live within walking or metro to work and play such as Alexandria, Fairfax, Georgetown, etc have the best of both world but I am not anywhere near that being a single incomer. So I opted for a big house, big retirement fund, big saving, but very little spending.

When I was first graduated as you are now, I opted to pay off my student loan. Mine was only ~$12k and i paid it off within 15 months. Of course, I had a crappy apartment so I could afford to do it.

Without knowing how much you make and your living arrangement, it is hard to tell you one way or the other. But you could never go wrong with investing in your career, something I neglect to do when I was young.

[breathemusic]

I think you should work on getting a small emergency fund in place (never know when you might need more work/interview clothes or some other unexpected expense after moving and starting a new job). Then work on paying your parents back the loan. Once you have at least a month of expenses saved up, you can start splitting the extra money and add a bit more to the emergency fund but also ad more to the loan payments so that you're still building the emergency fund slowly, but also getting rid of that loan.

Yes it's important to start saving for retirement early, but it's not going to kill you to not max your contributions the first few years of employment, especially if you know you plan to make it a priority once you're on your feet. And really, contributing 10% right after you get out of college and start your first job is pretty good. Better than a lot of people I know.