Student loan debt, could use some feedback

[ndindy]

Originally Posted by SAAN

My friend owes like $150K in loans and they are Private loans, I dont really understand the whole default or delinquency on loans stuff in a situation like this,but the question is:

If Navient says her payments are $1200 a month and she doesnt have it and wasnt paying and pays like $2-300 a month, depending on how much she has, does that make her in default or delinquency since she isnt making the $1200 a month payment and just $300 a month instead??


Really trying to convince her to pay something rather than nothing at all.

There are income based repayment programs with Navient for borrowers who are having a hard time making payments. There is an option to research those programs on the website but if she is behind she may have better luck calling them to make arrangements. Yes, in general it’s better to pay something and they will work with her during a hardship.

[ndindy]

Originally Posted by hikernut

I agree with this. Maxing out both 401k's would get the saving rate to around 15%, which I think should be the minimum target. 401k/IRA accounts are one of the few tax perks that working stiffs get.

I think this was covered by the interest rates are 3.8 and 4.7, fixed. There is no loan forgivness or assistance due to the income level. I did receive a grant from the state of California that was not income based.

I appreciate this viewpoint about saving the money towards retirement or just in general because returns have been so high on investments the last several years. This goes against the Dave Ramsey method, but he is also against consolidation. We have tried to pick the best advice from a variety of sources.
On the house and cars, I agree it’s a lot of money, but we live in coastal California. Expensive housing is a fact of life. We bought a house for many reasons including the tax break. The money spent on the cars could be used to pay down the debt, but we haven’t went that route and would be looking at spending money on transportation in some way. The $4000 or so we have in discretionary income is where I think we can tighten up and find some extra money.

I get two different perspectives from the forum posters in general. The first is you pay it off as fast as you can and take everything out of your budget you don’t absolutely need. Resume saving and long term planning once the debt is gone. I can see that if it was maybe a year, and for those who have made it work, I think it’s fantastic.

At the other end, minimizing the payments to draw it out 15-20 years seems almost as hard to get behind, though I see the logic in that as well. Saving the difference can lead to significant compounding on investments and at some point, the saving will overtake the loan balance and can just be paid off. We don’t know how long this market will increase, and a big decrease in the market can wipe out savings that could have paid off the debt. We actually made (almost) minimum payments for several years up until recently, and decided it was better to get it out of the way than extend it.

Another way to look at it would be to drop the 0 from the numbers. Student loan debt of $15k, $2100 gross income a month, $390 on housing, $85 car payment, and now the debt may not seem so crazy.

[cornsnicker3]

Originally Posted by ndindy

My husband and I have $150k in student loan debt. In the last two years, we have gotten serious about paying it off and have significantly increased our payments. We pay $2500/month towards the debt, and are on track to have it paid off by the end of 2023, possibly sooner. Since July of 2016, we have paid the balance down a little over $40,000.
Though I am happy with the progress, I feel like we could still be doing more to pay this down faster. I think retirement savings is a priority, so we each save 10% for retirement. Though I consider us frugal, we have a pricey mortgage, aren't willing to go down to a bare bones lifestyle to get this paid off in a couple years.
Anyone have a debt is this ballpark, and have some pointers that worked for you, be it budgeting, refinancing, time management with jobs....ect? Just asking to see if there is something I haven't thought about.

My wife and I have a very similar situation to yours in terms of loan amounts (>$100K), cost of living (at least formerly), and a desire to be debt free. Here are some of the things we did/are doing:

1. We Left California -

There were multiple reasons we left, but cost of living was one of the biggest reasons. We pay about $1179 for mortgage, tax, and insurance for our home here in Duluth. Back in SoCal, we were paying about $2200 for a cruddy 2 bed apartment in Huntington Beach. The price difference alone was attractive. That extra money is very comforting and we shove it at the loans.

If you leave, you will have to find a community that values and emphasizes the things you like or care about. For us, Duluth is really good at providing the community with a lot of nature-filled entertainment such as festivals, hiking trails, parks, free ice skating rinks, and of course...Lake Superior. The schools are very good considering the property taxes are so reasonable (~1.2% of assessed value for us). Utilities are appropriately priced for the season. Our gas bill is still lower in winter than a lot of people we know in the warm parts of the country. You priority would be to find where you fit in the most.


2. Joined social media support groups - My wife is BIG into the Instagram community for paying of debt. The community is very supportive and interactive. It is a nice boost to our morale and it is fun for her. You can learn a lot of ideas from these groups.

Don't be afraid to post your progress. People will often give you the added boost in confidence.

3. Chipping away at the small expenses -

(a) - This can encompass pantry challenges, replacing behaviors or products with products that use reusable stuff (e.g. replacing K-cups with reusable K-cups) that happen to result in lower cost.
(b) - Drive as little as humanly possible or replace driving with public transit if it can lower your cost.
(c) - Run the heater less in the winter (or not at all) and the AC less in the summer (or not at all).
(d) - Learn to make repairs on your own on your home or car.

4. Selling stuff - This can be as basic as selling old clothing or as complicated as making stuff and selling it.

5. Work more - This is probably one of the hardest of the things to do. Time is precious and none of us want to live our jobs at the expense of our family or personal life. I work a lot to pay off debt. It sucks to be away from family, but I know in the long run, it will pay off.

I hope these pointers help.

[man4857]

Originally Posted by ndindy

My husband and I have $150k in student loan debt. In the last two years, we have gotten serious about paying it off and have significantly increased our payments. We pay $2500/month towards the debt, and are on track to have it paid off by the end of 2023, possibly sooner. Since July of 2016, we have paid the balance down a little over $40,000.
Though I am happy with the progress, I feel like we could still be doing more to pay this down faster. I think retirement savings is a priority, so we each save 10% for retirement. Though I consider us frugal, we have a pricey mortgage, aren't willing to go down to a bare bones lifestyle to get this paid off in a couple years.
Anyone have a debt is this ballpark, and have some pointers that worked for you, be it budgeting, refinancing, time management with jobs....ect? Just asking to see if there is something I haven't thought about.

With any kind of debt, regardless of the size, I personally take a pure mathematical approach.

Look at several factors:
1) How much interest will you pay over the entire term (assuming you pay the minimum)
2) How much interest will you save by paying extra in increments of $x
3) How much time will you save by doing (2)
4) What is the marginal utility of that extra dollar you put towards the debt (i.e. how much time/interest will you save for every extra dollar you throw at the debt)

Because right now your trade-off is retirement savings and possibly any other financial goals you might have besides paying down your student loans.

What you'll find if you make the analysis of what I put above: you'll find that, if you were to throw the max you could, it doesn't really benefit you much in terms of interest and time saved. If you were to throw an extra couple hundred, it benefits big time. This is essentially compound interest working backwards.

So the analysis I'd make, after you calculate (1) - (4), is what's a reasonable amount of trade off for paying down debt at every level (level meaning, for various amounts of extra payments). There will be a point if you plot the amount you pay extra vs. how much interest/time you saved, that the curve will start bending flat (meaning even if you throw a ton of extra money at it, you don't save all that much interest and time, hence low utility). So find that part where it bends (the inflection point), and do that amount as it gives you the maximum utility per dollar you throw at the debt while also giving you room to do other financial goals like building your retirement savings because compound interest will work in your favor for retirement.

[Forever Blue]

I will make note to read through this thread...haven't read any of it yet. In the meantime, I'll post my experience w/ my student loan:

I have probably about $90K or a little more in student loan debt through Navient right now. I don't have a job currently that would afford the payments, which the last I knew, they'd have me at paying $900 something a month.

I don't have money for a thing else. My high rent keeps increasing every yr w/o fail, I'm trying to save up for a few HUGE things, etc., so I don't know when I'll be able to start paying this.

The last few times, I've done that IDR (Income-Driven Repayment) application & been approved to hold off paying for another year. But I know interest is still building up on it.

I'm getting incredibly afraid that bgy the time I start paying, I'll be homeless trying to pay the monthly payments for this because I can't afford to pay rent or anything else!

What do you all suggest I do here??