Sum of Money and School Loan

[bobmarley123]

I just graduated college and just got my bill. $35,000!!! I have managed to save $33,000 over the last couple years. That's all the money I have. I plan on taking a significant pay decrease next year when transitioning from a sales job (big commission helped me save that $$) to my career.

The sales job is fragile (for those who will say just stay there) and my job future is uncertain (no offers yet). I do not know what I should do with my money. Should I save a bit more and just pay the whole loan and deplete my savings? Or should I just pay monthly and keep the savings in case of emergency?

[JustBill]

Welcome to the boards. From the little information outlined, I suggest you just sit tight until you're settle in at your new career/job, then come back to the question after you have a better idea what the future may hold. Ordinarily, I'd kill the loan however.

[Ramose]

I would suggest reducing the size of the loan but retaining some savings as an emergency fund. Are you staying in the current job until you get a new job?

What are the interest rates and monthly payments for the loan?

What are your plans for the future? For example buying a house etc.

[bobmarley123]

Thanks for the replies. I already own a home. I do plan on staying at the sales job until I find another one, but this job is unstable for a number of factors.

The loans are as follows:

14982.00 at 4.500% (Direct Subsidized)
19974.06 at 6.800% (Direct Unsubsidized)
3301.49 at 3.875% (Direct Consol)

It appears I underestimated the repayment about by around $3000.


If I repaid the loans as they suggest, I will end up paying an additional $13,000 by the time I am done.

[siggy_freud]

Any other debts? Credit card? Car payment? Ideally you'd knock out the 6.8% interest loan tomorrow, unless you have other, higher-interest debts.

[bobmarley123]

Any other debts? Credit card? Car payment? Ideally you'd knock out the 6.8% interest loan tomorrow, unless you have other, higher-interest debts.

No, I already paid my car off. Just regular bills like utilities, food, phone.

[disneysteve]

I plan on taking a significant pay decrease next year when transitioning from a sales job (big commission helped me save that $$) to my career.

You expect your first full-time job in your chosen career to pay a lot less than whatever you were doing while in college? That doesn't sound right. May I ask what career you are entering?

Regardless of the answer to that question, no, you should not deplete your savings to repay your loans. You need to maintain a 3-6 month emergency fund if nothing else. I think you need to wait and see what your income and budget look like once you actually have a new job before you make any major financial decisions beyond that.

[esb3357]

I would pay of the 6.8% loan and keep the rest while you figure out how your work situation.

[jpg7n16]

I just graduated college and just got my bill. $35,000!!! I have managed to save $33,000 over the last couple years. That's all the money I have.

Say you lost your job tomorrow, how long could you make it on that $33k?

And how old are you? I'm assuming recent college grad to be 22-23.

And all the money you have? No retirement savings at all?

The sales job is fragile

How do you mean?

[bobmarley123]

No retirement savings. Closer to 30 years old actually. Long story, but I bought a house with a girl, she finished college, left me with the house, the market crashed and now I pay the mortgage on a negative equity house. Slowly working my way out of that.

When she left, I got my act together, went back to school and finished. Now I'm trying to figure out what to do about this school loan.

As far as the job, google "fake dipl oma" and you'll understand my situation. I do graphic design for one of those companies in the top three of four pages of google. I know what you're thinking, but it's not illegal (yet?), the "novelty" disclaimer protects the owners. The job could disappear at any moment obviously, so I can't count on it - which is the main reason I started saving in the first place.

[disneysteve]

Depending upon your point of view, you haven't really "saved" $33,000. What you actually did was borrow $38,000. Had you been paying your bills as you went, you'd have little to nothing in savings and only $5,000 in debt.

What you should do going forward really depends on what your situation is. We need to know income and expenses to give any better advice.