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The loan amounts that have interest rate reduction for on-time payments are very small relative to the overall debt.
You won't be able to deduct any interest on taxes so you should consolidate it all into a single private loan with a much lower interest. Have your parents co-sign if they are well off and you will get an excellent interest rate as it will be a low risk loan. Sounds like they can trust you on paying it off yourself.
Getting out of debt is important, but if you believe you'll be able to maintain or increase your income in the long run, I wouldn't worry too much about paying off the loans fast. What you are doing is fine. You were in school for a long time; now that you have a job, you'll find things you couldn't do while in school that you'd like to try out. If you want to build a family, don't let the loans get in the way. Money can be earned later, but time and youth can never be earned back. A balanced approach is what you need; don't go to either extreme.
You may want to buy disability insurance so that you'll still be able to pay off the loans if bad things happen. And don't forget to contribute to your retirement accounts at least to maximize employer's match.
You need to view your whole financial picture, not just one specific segment of it. Talk to a financial planner or someone you trust that has a lot of knowledge and experiences in personal finance and he can help you draft a plan that is balanced and sustainable. A plan may sound great in paper but if it is not realistic and sustainable, it deserves to be in the trash.
The loan amounts that have interest rate reduction for on-time payments are very small relative to the overall debt.
You won't be able to deduct any interest on taxes so you should consolidate it all into a single private loan with a much lower interest. Have your parents co-sign if they are well off and you will get an excellent interest rate as it will be a low risk loan. Sounds like they can trust you on paying it off yourself.
Terrible advice. Federal loans have a lot of protections for hardship or income reduction situations, private loans have much less flexibility. Consolidating such an enormous amount of debt into private loans (and having a cosigner put his/her entire financial life at risk) is such a crazy idea I don't even know where to start.
Getting out of debt is important, but if you believe you'll be able to maintain or increase your income in the long run, I wouldn't worry too much about paying off the loans fast. What you are doing is fine. You were in school for a long time; now that you have a job, you'll find things you couldn't do while in school that you'd like to try out. If you want to build a family, don't let the loans get in the way. Money can be earned later, but time and youth can never be earned back. A balanced approach is what you need; don't go to either extreme.
You may want to buy disability insurance so that you'll still be able to pay off the loans if bad things happen. And don't forget to contribute to your retirement accounts at least to maximize employer's match.
You need to view your whole financial picture, not just one specific segment of it. Talk to a financial planner or someone you trust that has a lot of knowledge and experiences in personal finance and he can help you draft a plan that is balanced and sustainable. A plan may sound great in paper but if it is not realistic and sustainable, it deserves to be in the trash.
Honestly, that amount of debt is very high and having a family before at least the 6% and 7% loans are paid off is asking for serious financial trouble. I won't go so far as to say all the debt must be paid off though.
Your plan looks good, and I think you're smart to try and get rid of them by throwing anything extra at the higher interest rate loans. That's what I did with mine from law school and finally getting them paid off felt great. Good luck, you'll get there!
Thanks. I know it's not going to get paid overnight, but i will chip at it gradually. I feel sick to my stomach knowing i pay ~$900/month just on interest. I have to really attack this beast.
Quote:
Originally Posted by Leon2014
The loan amounts that have interest rate reduction for on-time payments are very small relative to the overall debt.
You won't be able to deduct any interest on taxes so you should consolidate it all into a single private loan with a much lower interest. Have your parents co-sign if they are well off and you will get an excellent interest rate as it will be a low risk loan. Sounds like they can trust you on paying it off yourself.
Yes, I will aggressively pay these off once I pay off the higher interest rate loans. If i pay it off too fast before 12 or 24 months (terms of the rebate/discount), then i will lose the benefits. I will put extra payment on one loan at a time.
Consolidating will sure save me a ton, but i wouldn't be able to defer it in case of hardship and other benefits. Also, two of my loans are private loans with 3% and 3.74% interest. I will most likely pay these last to save the most.
Getting out of debt is important, but if you believe you'll be able to maintain or increase your income in the long run, I wouldn't worry too much about paying off the loans fast. What you are doing is fine. You were in school for a long time; now that you have a job, you'll find things you couldn't do while in school that you'd like to try out. If you want to build a family, don't let the loans get in the way. Money can be earned later, but time and youth can never be earned back. A balanced approach is what you need; don't go to either extreme.
You may want to buy disability insurance so that you'll still be able to pay off the loans if bad things happen. And don't forget to contribute to your retirement accounts at least to maximize employer's match.
You need to view your whole financial picture, not just one specific segment of it. Talk to a financial planner or someone you trust that has a lot of knowledge and experiences in personal finance and he can help you draft a plan that is balanced and sustainable. A plan may sound great in paper but if it is not realistic and sustainable, it deserves to be in the trash.
I am not getting married anytime soon, unless i find someone willing to help in paying off my loans Like you said time cannot be earned back. I will also try to max out my 401k contributions to take advantage of my employers match. I will also look into disability insurance. I know my current plan is just on paper and live sometimes has surprises we didn't plan for. At the latest, i should have this all paid of in 8 years, although i am shooting for 5 to 6 years. Thanks for you feedback.
Terrible advice. Federal loans have a lot of protections for hardship or income reduction situations, private loans have much less flexibility. Consolidating such an enormous amount of debt into private loans (and having a cosigner put his/her entire financial life at risk) is such a crazy idea I don't even know where to start.
Actually, one of my private loans has a co-signer on it (my sister). It was a $18,000 loan (~$21,000 with interest added). Do you think i should pay this off first, even though it has an interest rate of 3.74%?
The loan amounts that have interest rate reduction for on-time payments are very small relative to the overall debt.
You won't be able to deduct any interest on taxes so you should consolidate it all into a single private loan with a much lower interest. Have your parents co-sign if they are well off and you will get an excellent interest rate as it will be a low risk loan. Sounds like they can trust you on paying it off yourself.
The only thing I might consider doing is getting a 0% rate balance transfer from my credit card, which has a 2% fee and just dump it into one of the higher interest rate loans. Then i have like 2 years or so to pay off the credit card. I know CC balances are more risky, but it will be about $20,000 transfer or less at a time.
Ii agree that it is best to try to pay them off as soon as possible. Establish a monthly budget that allows you to clear up as much free money as possible to throw at your loans. Income-Expenses= Left over money. Challenge yourself to find ways to cut down expenses.
Repeat each month.
A few thoughts:
-Look to sell anything you don't need to raise money (dvd's, cd's, clothes, etc.) Anything that you don't really want, or use, that has value could actually help your situation. Remember that with a loan like this, it is wisest to throw AS MUCH money as you can in the front end because that is when interest is the greatest. Most of your early payments will be going toward interest, and not principle so you want to reach the threshold where that flips as soon as possible.
Also, remember that interest is tied to a TIME factor. The less years you take to pay this off...the less you end up paying in interest.
-Understand how they are compounding your interest...this will help you see the big picture and how paying it off sooner helps you.After each month's payment (large I assuming) you should be paying less in interest.
-Track your progress. you want to see that you are tackling your loans and you should be very PROUD that you are tackling it instead of just ignoring it or expecting someone else to bail yourself out.
-Live your life, try to get raises to increase your income side and before you know it you will be done.
Actually, one of my private loans has a co-signer on it (my sister). It was a $18,000 loan (~$21,000 with interest added). Do you think i should pay this off first, even though it has an interest rate of 3.74%?
What's past is past, but I do think you should have a small life insurance and disability insurance policy for this, unless your sister's income is very high compared to this loan (e.g. > $100k). At least that way she'll be protected if you can't work for any reason.
You should really have disability insurance for all the private loans anyway, since it can be difficult to get a discharge.
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Federal loans have a lot of protections for hardship or income reduction situations, private loans have much less flexibility. Consolidating such an enormous amount of debt into private loans (and having a cosigner put his/her entire financial life at risk) is such a crazy idea I don't even know where to start. 
Like you said time cannot be earned back. I will also try to max out my 401k contributions to take advantage of my employers match. I will also look into disability insurance. I know my current plan is just on paper and live sometimes has surprises we didn't plan for. At the latest, i should have this all paid of in 8 years, although i am shooting for 5 to 6 years. Thanks for you feedback.
