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.
My Inglorious Debt:
$60K Private student loan - @ variable interest rate (I stopped paying this in Aug.)
$60K Federal student loan - @ 2.75%
$270K Mortgage - @ 5%
If I have $1.5-2K/mo. extra to pay down debt where does it go and why?
If I have $20K in the bank collecting 1-2% where does it go and why?
If I get a decent size tax return of $10K+, where does it go and why?
Do I try to pay down the house or the private loan, first?
Do I try to invest the $20k?
Appreciate the help?
Last edited by crazystylin; 11-24-2009 at 11:48 AM..
You really didn't provide us with very much info. Why did you stop paying the private student loan? How much of an emergency fund do you have? Are you married? Do you have children?
Seems the last thing to do with all that debt and the current climate is to invest. And if you stopped paying a $60K loan, aren't you going to be screwed? Can your wages be garnished for that? I know with the federal loans, they absolutely will be, and any tax money coming to you will not come to you, it'll be electronically grabbed.
Sounds like the $20K is an emergency fund. That seems like a good idea. Like said previously, more info needed.
Offhand, was the schooling worth it to you?
You need a big enough emergency fund to last 6 months. If it isn't there, pay your minimums until it is.
Is your house upside down, little equity, or a lot of equity? If it is upside down or you have little equity, paying it down won't really help you gain security in the short term.
Your goal should be to handle your debt as safely as possible including the chance that you may need to be unemployed for a while. There are some tax advantages to paying off the mortgage first, but the safest strategy for you would be to pay off the private loan before the mortgage because you'll be able to eliminate that payment (which could skyrocket if inflation goes through the roof) much faster than you'd be able to get rid of the mortgage.
As others have said, you really haven't given enough information for us to provide accurate and insightful responses. Just the same, here are some off-the-cuff thoughts with the assumption that you already have an adequate (6+ months) emergency fund, retirement accounts that are being steadily funded, no other debt (cars, credit cards, etc) and a reasonably secure income stream.
Quote:
Originally Posted by crazystylin
If I have $1.5-2K/mo. extra to pay down debt where does it go and why?
Variable rate student loan because it's going to cost you the most in interest expense. I'd also try to lock that into a fixed rate if possible.
Quote:
Originally Posted by crazystylin
If I have $20K in the bank collecting 1-2% where does it go and why?
Variable rate student loan for the same reason mentioned above.
Quote:
Originally Posted by crazystylin
If I get a decent size tax return of $10K+, where does it go and why?
Variable rate student loan, and we already know why. Additionally, I'd adjust something on my withholdings so that I no longer gave the government an interest-free loan on MY money over the course of a year.
Quote:
Originally Posted by crazystylin
Do I try to pay down the house or the private loan, first?
Private loan. We already know why.
Quote:
Originally Posted by crazystylin
Do I try to invest the $20k?
No. I don't know what your interest rate on the private loan is, but figure that whatever the rate is as your guaranteed return if you pay the note down early. The only way I'd let that slide right now is if the variable rate is extremely low and I could get a higher return in some type of "safe" investment.
Keep the money in the bank and don't invest it, too risky, or put it in a CD. Better to have a cushion.
Pay $1,000 a month extra on each of the two student loans each month.
If you get a $10,000 return apply that to the principal on the mortage.
Mostly for ease of bookeeping.
However, you could -
Put the $10,000 into a Roth IRA to build up your savings.
Pay an extra $2,000 a month on the principal of your mortgage to shorten the term,
and make regular payments on both student loans as long as interest is low.
My Inglorious Debt:
$60K Private student loan - @ variable interest rate (I stopped paying this in Aug.)
$60K Federal student loan - @ 2.75%
$270K Mortgage - @ 5%
If I have $1.5-2K/mo. extra to pay down debt where does it go and why?
If I have $20K in the bank collecting 1-2% where does it go and why?
If I get a decent size tax return of $10K+, where does it go and why?
Do I try to pay down the house or the private loan, first?
Do I try to invest the $20k?
Appreciate the help?
60k so the monthly can vary
60k is fixed monthly
270k is fixed monthly
You have 1.5 to 2k / month extra?
You are not sure exactly how much is extra?
That means, you need to spell out your budget and make it work.
Either find more income, or cut down some more on spending.
I would keep work on the budget so you can have a forecast for at least a year on where that money is going.
I would keep the $20k in liquid to cover your budget, until you can adjust to cutting down, or generate more income to cover the loss of your cash cushion.
With that cash cushion totaling of $30k, how long will that cover your budget?
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.
