Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
So my first student loan payment is right around the corner and I am in desperate need of some advice. I tend to over think and analyze situations and would really appreciate some help in being steered in the right direction here. I'm trying to figure out the best way for me to pay off my loans quickly but still save up money in the mean time. I have about 22,500 in student loans (subsidized and un-subsidized) that I now have to start paying back.
I am 23 and recently became employed as an RN working 32 hours a week making about $1,500 bi-weekly. Currently I have a little over 11,000 saved up, live at home with my parents, and have no other forms of debt or expenses (no car payment, no credit card debt, etc). I have been very fortunate and my parents have helped me out quite a bit paying for my phone, insurance, etc. However, I would like to move out sometime over this summer. How do I best pay off my student loans while preparing to live on my own. I would like to get as much paid off as possible before I move out while still having a savings. I've thought of a couple ways of paying off the loans, but am not sure what the best avenue to take is. Any thoughts??
employed as an RN working 32 hours a week making about $1,500 bi-weekly (edit: $23/hour)
live at home with my parents, and have no other forms of debt or expenses... a little over 11,000 saved
I have about 22,500 in student loans
How do I best pay off my student loans while preparing to live on my own.
@$23 per hour... 978 hours of work will produce the $22,500 owed
With one 8 hour shift per week devoted to the debt... 122 weeks has it paid off.
Allowing for taxes and interest... call all of that 3 years and you're all done.
Working 40 hours per week (or more) is allowed too.
At 6.8%, I'd focus on killing that student loan as quickly as possible before taking on any other expenses. I'd set aside three months worth of expenses (around $5-6,000 but may vary enormously depending on how you live) in the savings account and apply the rest towards paying down that loan - because that interest rate will eat you alive if you don't kill it as quickly as possible.
Some here will say to keep the full $11,000 in the bank - but I ask why? I think three months - or about $5,000 - is plenty. This is because you can likely fall back on your parents if you're faced with some unexpected disaster.
Keeping that $11,000 in the bank isn't doing you much good where it's maybe earning 0.6% (which is what I'm getting, actually). But you are paying 6.8% to the federales. Pay it off.
That said, you're definitely on the right track and fortunate to have parents willing to help out until you can get firmly established. I'd pretty confidently predict you could have that bill paid off in less than a year and then move out at your leisure.
make sure you set up any discounts you may qualify for. paying by direct debit usually gets you a small interest savings.
i would basically pretend like you're paying rent - whatever that might be in your area, and pay that on to your loans for now. as the other poster said, save up an emergency fund, and for now i would forgo additional savings and put it all on the loans.
I'm a big believer in an emergency fund, but in this case, I would agree with hensleya1's advice, in that I wouldn't worry about keeping more than $5000 or so in an emergency fund if you are able to fall back on your parents in a TRUE emergency. But a reminder that in addition to an emergency fund, you are also going to need "starting out" money. For your first place, you are going to need a deposit, first month's rent, and possibly last month's rent. In addition, you may need to buy furniture and other household goods (towels, bedsheets, pots/pans, silverware), in some places you may need to buy a washer/dryer/fridge for a rental, etc. So I wouldn't go spending that $11k just yet.
Let's look at those numbers for a minute. You have about $22,500 in debt, make about $3250/month (since you get paid biweekly instead of semimonthly, you make a little more each month than twice your biweekly paycheck, on average). If you just keep what you have now in savings, and apply everything else toward debt, you will be paid off in about 7-8 months. 8 months from now is July. You said you wanted to move out next Summer.
That being the case, my advice is to keep living at home, put every penny you make toward your debt (higher interest rate first), and be debt free with $11k in the bank when you move out next summer. If you can pick up some extra hours during that 8 months, you will be even better off.
*Edited to say that an alternate plan could be to take your entire $11k and throw it against your debt NOW, saving those interest charges, since you have that safety net of your parents. Pay every penny toward your debt until it is paid off, then stay at home until you save back up to about $11k (or whatever number you need to cover your "starting out" costs and at least a small emergency fund. You might be able to save enough on interest to move out sooner doing it that way.
hey, take a breather, first of all, congrats on being an rn,,,,, you'll make damn good money for the rest of your life..great profession,,
pay the loan off as you can,,,,,its good to be aware, of the loan,,but not a slave to it,,
save up as much as you can,,,,,I wouldnt kill off the loan,,,,,keep some money in the bank,,
as you get older, expenses become relative,,,,not buying un needed items is like savings,,,,if you dont drink,,then thats a savings, if you dont smoke, theres 3k a year,,,if you dont go out to eat much,,again,,,more savings,,,
if you buy a new car,,,there's 4-500 mnth
if you buy a decent used one,,it could be 150-200 mnth,,,its all relative..
you are young,,,,and it really isnt much debt.
id want to save up as much as i could to pay for a house or good down payment...
because if you take a 30 yr mortgage,,,you are getting soooo screwed by interest
Let's look at those numbers for a minute. You have about $22,500 in debt, make about $3250/month (since you get paid biweekly instead of semimonthly, you make a little more each month than twice your biweekly paycheck, on average). If you just keep what you have now in savings, and apply everything else toward debt, you will be paid off in about 7-8 months. 8 months from now is July. You said you wanted to move out next Summer.
That being the case, my advice is to keep living at home, put every penny you make toward your debt (higher interest rate first), and be debt free with $11k in the bank when you move out next summer. If you can pick up some extra hours during that 8 months, you will be even better off.
*Edited to say that an alternate plan could be to take your entire $11k and throw it against your debt NOW, saving those interest charges, since you have that safety net of your parents. Pay every penny toward your debt until it is paid off, then stay at home until you save back up to about $11k (or whatever number you need to cover your "starting out" costs and at least a small emergency fund. You might be able to save enough on interest to move out sooner doing it that way.
Sounds like a plan.
With your parents as your safety net, throw everything against those loans and get them paid off. Sign up for extra shifts to hurry it along, but don't move out until you are debt free with some savings ($5K?) in the bank.
By next fall, you should be debt free with a good job and ready to launch into the world.
Good luck.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
