New Job, Massive Student Loan debt

[sagremus]

I am a recently graduated student from a private university. There is a long backstory to this, but the bottom line is that I was foolish and took out a lot of student loan debt for my education. I found employment before I graduated, however this job fell through.

I have found another job (a job that is my dream career) and have my start date next week. Among planning to begin my career and being excited to start working, I have been getting my finances together. I have met with a financial counselor before and will be meeting again, but I want some advice, because my large amount of debt is a constant stressor. Today I got my paperwork organized and rounded up the grand totals.

My current (and only) debt is:
Federal Student Loans: $34,676
Private Student Loans: $42,752
Grand Total: $77,427

Yes, that is almost $80,000 in student loan debt. A major life mistake, but one that I desire to pay back. It is my goal to pay back every cent that I have borrowed and become debt-free.

My new job is an hourly wage, and thankfully, I have a degree which will allow me to make relatively decent money in this economy. My job will pay me roughly $55,000 before taxes, however this does not include the bonuses I will receive, and my job is part time with the option to pick up full time hours.

I bus to work, and I share an apartment with my fiance with monthly rent of $380/month per each of us. We have a very simple lifestyle. When we get married, our combined income will be approximately $110,000 before taxes.

I am wondering if you think I will be able to survive with these numbers -- either by myself, or with my fiance's help. Also, what do you think is a realistic timeline for paying off this debt? My dream is to own a home, but I do not want to take out a mortgage while I have this debt as well.

Thank you for your input.

[Aristippus]

You're going to get a lot of folks posting and telling you -- correctly -- that you haven't provided enough information here. Specifically, it would be helpful to know what your take-home pay is (for you and your fiance) and what other expenses you have.

That being said, though, I'll start with some ballparking just to get the thread going. With a joint before-tax income of $110k, I'd put your take-home at between $60-65k, depending on variables like local taxes, cost of employer-provided medical (if any), and amout you're contributing to an employer-sponsored 401k (if any).

Ok, so that's $5000-5400/month. You're rent is on $760 a month, which is an extraordinary advantage here -- it's only 15% of your income or less. Let me make some other assumptions, based on costs in my area; for 2 people, I can imagine these monthlies:

$760 Rent
$500 Groceries
$100 Internet/cable
$100 Cell Phone
$200 Gas/Electric
$200 Gas and car maintenance
$150 Insurance (renters and car)
$2010 monthly obligations

So, if that's close, you should have ~$3000/month for other stuff. Even if you both have car payments and want some fun money, that still leaves you with $2000/month. If you throw that all at the student loans, you'd have them paid off in under 4 years.

But, as I said, that's just spitballing. Real numbers would help in getting you a real answer.

[parafly]

You should keep your money separate from your fiancee until you are married.

I disagree completely. An engagement should signal and initiate a gradual integration of finances.

Most failed marriages are due to financial reasons. Better to find out sooner rather than later. A couple needs to determine if they are financially compatible BEFORE they make the ultimate commitment to each other.

[snafu]

What interest rate will be charged on these loans? Will your employer offer any matching retirement dollars when you meet their eligibility requirements? I suggest you run the numbers to see what the total loan payment will be over X years including interest.

How do you feel about debt? Would you be willing to take on some [other] part time work in addition to the hours you get at the 'career' job to kick start reduction of debt? Would you be willing to add any tax reduction that results from payments or windfall/unexpected income as extra payments? The good news is that your career is just starting and you will likely be in a much stronger financial position as you gain experience.

Sadly you have graduated with an 'albatross' like loan that will affect your choices and decisions for more than 15 years. You will indeed pay 'every cent'[plus interest] no matter where you live or what you do or how your personal circumstances change because student loans are not dis-chargeable..not even in bankruptcy.

[disneysteve]

that is almost $80,000 in student loan debt.

When we get married, our combined income will be approximately $110,000 before taxes.

Honestly, I don't really see the problem here. When my wife and I got married, I had $100,000 in student loan debt and a combined income of about $85,000. I like your numbers better. Over the next 11 years, we paid off all of the student loans, her car (already owned), bought her a new car, bought me a new car, bought a house, had our daughter, did plenty of traveling and lived a nice life. Yes it would have been great not to have the loans, but if I didn't have the loans, I wouldn't have had the income either. No regrets here.

As Dave Ramsey says, you have a big hole but you also have a large shovel with which to fill it. Live frugally and you should have that debt gone in under 10 years. Throw your bonuses and raises at it and it'll be gone even sooner than that.

[sagremus]

My budget is under major shifts due to this new position. I will not be able to sign up for benefits until the 1st of August, so I am not sure my insurance costs or my net pay. Right now, I spend roughly $800-900 a month, not including car insurance, health/dental insurance, or my phone. I would estimate my personal costs to be $1,600 a month with insurance and phone added in. Does that seem reasonable?

My financee and I will not be mixing our money until we are married, but he intends to help me pay my debt once we are married (which will happen in the next 2-3 years).

Because of the nature of my career (nurse), I would not be willing to take an extra job on top of full time work. Being a nurse is mentally, physically, and spiritually exhausting. I am a person who is dedicated to being debt-free and plan on putting any extra bonuses, holiday pay, or other extra money towards my debt.

Interest rates range from between 4.5%-6.8% (on federal loans) to 4.5%-7.5% (on private loans). Monthly payments after consolidation on federal loans is $260/month, on private loans w/o consolidation monthly payments are $350/month.

[newlywed2012]

My financee and I will not be mixing our money until we are married, but he intends to help me pay my debt once we are married (which will happen in the next 2-3 years).

You're engaged but not marrying for maybe 3 years? Definitely definitely keep your finances separate. Was there a reason to get engaged when you were so far off from marriage?

I don't see your financial picture as bleak. I had $100k in loans and went into a job that paid $42,000 a year. I got mine paid off in 3 1/2 years. It's SO possible, especially sharing living expenses with your fiance. Don't despair! Once you start making good strides at paying it down it will get fun to see your debt go down, down, down each paycheck.

[snafu]

Before taking steps to consolidate SL, check the tax consequences. I suggest you boost your monthly payments to get through this process faster. The extra sums can apply directly to principal and be based on your hours/incom. Nurses working out our University [for example] are not physically nor mentally exhausted at 4 PM. and often accept extra hours at the near-by walk-in clinic.

[Christian321]

Honestly, I don't really see the problem here. When my wife and I got married, I had $100,000 in student loan debt and a combined income of about $85,000. I like your numbers better. Over the next 11 years, we paid off all of the student loans, her car (already owned), bought her a new car, bought me a new car, bought a house, had our daughter, did plenty of traveling and lived a nice life. Yes it would have been great not to have the loans, but if I didn't have the loans, I wouldn't have had the income either. No regrets here.

As Dave Ramsey says, you have a big hole but you also have a large shovel with which to fill it. Live frugally and you should have that debt gone in under 10 years. Throw your bonuses and raises at it and it'll be gone even sooner than that.

I agree with Steve here. This is not as bad as it may seem to you. You seem to have a job that pays pretty well right out of the gate. All you have to do is live VERY frugally (i.e. keep rent as low as possible (no luxury living until out of debt), avoid buying new or expensive cars, use credit cards for emergency only, cook food at home, avoid buying all the latest gadgets/toys/electronics etc). If you make a serious effort to live below your means, you will be out of debt in no time.