Budgeting: How Much Should My Cost of Living Be With My Student Loan Debt?

[Brandon216]

Brandon, what are the interest rates on your student loans, and how do the balances break down on each loan?

Sallie Mae Signature (Private Loans)
$14,581.67 [8.25%] minimum due/monthly ($121.06)

$18,700.76 [8.25%] minimum due/monthly ($125.10)

$9,886.18 [8.12%] minimum due/monthly ($65.16)

$25,779.67 [9.25%] minimum due/monthly ($191.09)



Direct Subsidized Stafford Loan
$1,771.98 [2.35%]
$2,475.03 [6.80%]
$3,868.55 [6.00%]

Direct Unsubsidized Stafford Loan
$1,525.21 [6.80%]

minimum payment for the last 4 is usually $150 or so each month in addition to Sallie Mae.... yep my minimum payments are likely going to be more than my rent.

By all means if you know of a solid strategy to get these paid back please share any advice. considered snowball effect paying back smallest but others have advised me to take down the biggest interest first. Either way at the beginning of the news year and maybe a little sooner something has to change.

[TheKayla]

Sallie Mae Signature (Private Loans)
$14,581.67 [8.25%] minimum due/monthly ($121.06)

$18,700.76 [8.25%] minimum due/monthly ($125.10)

$9,886.18 [8.12%] minimum due/monthly ($65.16)

$25,779.67 [9.25%] minimum due/monthly ($191.09)



Direct Subsidized Stafford Loan
$1,771.98 [2.35%]
$2,475.03 [6.80%]
$3,868.55 [6.00%]

Direct Unsubsidized Stafford Loan
$1,525.21 [6.80%]

minimum payment for the last 4 is usually $150 or so each month in addition to Sallie Mae.... yep my minimum payments are likely going to be more than my rent.

By all means if you know of a solid strategy to get these paid back please share any advice. considered snowball effect paying back smallest but others have advised me to take down the biggest interest first. Either way at the beginning of the news year and maybe a little sooner something has to change.

I'd knock out at least that smallest one, or perhaps a few of the smallest ones first if you feel like you're too tight on cash. Sure, it makes less mathematical sense, but it will give you more wiggle room for lifes unexpected things in terms of the minimum payment. You can then allocate the savings in minimums from those to your bigger loans. After you feel more comfortable with that, keep throwing everything at the highest rate loans.

I noticed your have some high interest rate private loans -- have you looked into consolidating or trying to find a cheaper rate? I know with government loans consolidating hardly ever makes sense because it'll just average your rates, but I'm not sure what the situation is on multiple private loans. Definitely look into other options for getting those lowered.

Think of other options outside the box too: for example, my mom and I talked about having her get out a home equity loan at around 5% to pay off some of my loans at around 8%, and have me pay off that equity loan. Of course, that would leave me without the benefits and 'safety' behind government loans, and only put more debt on my mom which could hurt her financial situation (even with my 100% intention of paying her back). We ultimately decided against it, but it was a good thing to consider, and a backup solution for someone who may need a solution like that more. This is just an example, but do a lot of research and try to think of options like that and then determine the risks/benefits of doing so if you are ever finding yourself really stuck.

I'd also really consider getting a part time job still to put anything extra you can towards these debts, even if only for the first year. It will help out so much, it will be a year of extra work versus several years added on in debt repayment.

[Brandon216]

Thanks for the advice Kayla! I have a second job in addition to my 9-5 and that really does help. Hoping moving to a new less expensive apartment will help!

I'll also consider other options. Perhaps peer lending for the biggest loan at 9.25% - that one drives me crazy

[breathemusic]

Brandon,

Not sure if you already looked into it, but for a $40k salary, a monthly take-home of $2200 is right. I made the same mount coming out of college and just looked at my budget spreadsheet from back then and I was making $2250 per month (keep in mind any different state taxes as I'm in DC, not GA). I looked and I also got back about $1300 in my fed and state tax returns. So I probably could have adjusted my withholding, but I'd hate to accidentally have too little withheld and have to pay in.

The think to keep in mind if you get bi-weekly paychecks is that for 2 months every year you'll actually get 3 paychecks. So that's an extra $2200 that you're not considering in your total yearly take-home pay.

[Brandon216]

Brandon,

Not sure if you already looked into it, but for a $40k salary, a monthly take-home of $2200 is right. I made the same mount coming out of college and just looked at my budget spreadsheet from back then and I was making $2250 per month (keep in mind any different state taxes as I'm in DC, not GA). I looked and I also got back about $1300 in my fed and state tax returns. So I probably could have adjusted my withholding, but I'd hate to accidentally have too little withheld and have to pay in.

The think to keep in mind if you get bi-weekly paychecks is that for 2 months every year you'll actually get 3 paychecks. So that's an extra $2200 that you're not considering in your total yearly take-home pay.

Thank you for sharing that. That does clear it up a bit. Thank you

[klarose]

Brandon,

Not sure if you already looked into it, but for a $40k salary, a monthly take-home of $2200 is right. I made the same mount coming out of college and just looked at my budget spreadsheet from back then and I was making $2250 per month (keep in mind any different state taxes as I'm in DC, not GA). I looked and I also got back about $1300 in my fed and state tax returns. So I probably could have adjusted my withholding, but I'd hate to accidentally have too little withheld and have to pay in.

The think to keep in mind if you get bi-weekly paychecks is that for 2 months every year you'll actually get 3 paychecks. So that's an extra $2200 that you're not considering in your total yearly take-home pay.

This is the exact amount we are making right now. $40k gross a year. $2,250 a month net. About $1,300 back on taxes.