WWMMD? - Paydown

uncreatedsnow · May 2014

Ok, I have some personal loans that are out. I also I have the money in the bank to pay them all off but I am nervous about spending so much at one time going into a new job(it's a new 2nd job, I'm a Frat mom and I'm just moving houses, but if things don't work out I will have to get an apartment on my own) and am trying to play it safe for right now. I have $1,000 in my e-fund and $4,000 in savings. My only bills are Car Loan(next on the paydown list after these loans), Student Loans(qualify for forgiveness so paying minimums), Car Insurance, Cellphone and monthly expenses. I was looking to spend $1,000-$1,500 right now on these loans and trying to work out the best way possible. WWMMD?

Loan 1: $ 765.55 4.95% $19.44 minimum payment
Loan 2: $ 531.40 4.76% $19.42 minimum payment
Loan 3: $1219.86 4.92% $29.10 minimum payment
Loan 4: $ 946.10 4.45% $28.84 minimum payment

My thoughts are either to pay off Loan 3 or Loans 1 & 2 right now then see how things go with the new house while padding savings and overpaying the other two before paying off the others this Fall.

strickland8052 · May 2014

I'd pay off Loan 3 and about $300 towards Loan 1, because they are the highest interest. I think you are right to keep at least $3k as an e-fund.

lifeonthehill · May 2014

Personally I would pay off loans #1 and #2 in full. H and I need the small victories of paying off things quickly so we started with the smallest loans first.

I would wait till you are sure you wont need an apartment and then I would pay off the other two loans in full.

Then you can work on building savings/retirement/whatever else.

hoffse · May 2014

Well the interest rates are so incredibly low that I would give it a few months, make sure everything is set up with your new job, and then reassess.

What would suck is this scenario:

1) You pay off these loans that are less than 5%

2) The job falls through

3) Suddenly you need an apartment and have to charge stuff at 20-25% on a credit card because the various deposits, new rent, moving costs, etc. drain the rest of your savings.

It will only cost you a few bucks in interest to sit tight until you have clear knowledge about this new job. I think that's worth it, personally.

KTdidit · May 2014

I'm all for small victories so I would pay off #1 and #2 first, then pay the $40 you would've paid in monthly pmts to #4. Then $70 addtl to #3.

uncreatedsnow · May 2014

That's why I don't want to pay them all off. Honestly, the only way it wouldn't work out is if this Frat loses it's charter. Otherwise I'm in it for the long haul. If worse comes to worse, I can always take these loans back out(at a similar interest rate). I don't want to have to do that obviously, but it's what I do instead of credit cards because the interest is better than I could get with a credit card at the moment.

ta78 · May 2014

I would pay off 1 & 2. Then use the extra $40 towards loan 3.

Wulfgar · May 2014

I would just wait until you have a few months under your belt then pay off all of them at the same time. This way you know whether you really want to stay or not.

KatieCutie05 · May 2014

Id save all you can for a few months until ur settled in ur job and living situation. Then pay off all the personal loans at once and put the rest toward ur car loan. Car loans and student loans are debts as much as these personal loans are. What are your long term goals? And what type of forgive ness do the student loans have.... How long and what do you have to do? I figured out that its cheaper to pay off mine asap then to go on paying imterest only for 15 years.

uncreatedsnow · May 2014

I've been a Frat Mom for years, I just am moving to a new house with a new contract. Unless a charter gets pulled I am there and going to stick it out. It's not near as bad as it seems, and pretty awesome once you throw in the financial benefits.

@KatieCutie05 The plan is to pay off these loans then bump my e-fund to $2500, then pay off the car, then put everything into savings. I only have four years left before they forgive the rest of my loans, have already worked in public service for six. It drives me crazy not to over pay them or add them into my snowball, but it does end up working out in my favor in the long run.

hoffse · May 2014

Just make sure you check the tax implications of loan forgiveness. It will probably end up saving you money to go through with it, but you might want to start saving for that tax bill so that it's not a major financial disruption.

uncreatedsnow · May 2014

hoffse said:

Just make sure you check the tax implications of loan forgiveness. It will probably end up saving you money to go through with it, but you might want to start saving for that tax bill so that it's not a major financial disruption.

Will do! Thank you. I hadn't thought of that.

brij2006 · May 2014

I would pay them off entirely with what is in your savings, then live on a strict budget for the next few months to build up some more cash just in case with the move.

After the move, I would apply anything left over (except the $1k Efund) toward the next smallest debt. Whether that be the SL or car.

How much do you have in SL's? The loan forgiveness program is nice, but do you really want to continue to live paying those for the next 4 years, when you could have buckled down and had them paid off within the next year or 2?

uncreatedsnow · May 2014

brij2006 said:

I would pay them off entirely with what is in your savings, then live on a strict budget for the next few months to build up some more cash just in case with the move.

After the move, I would apply anything left over (except the $1k Efund) toward the next smallest debt. Whether that be the SL or car.

How much do you have in SL's? The loan forgiveness program is nice, but do you really want to continue to live paying those for the next 4 years, when you could have buckled down and had them paid off within the next year or 2?

The car is the next smallest and definitely going ASAP! I can't WAIT to not have a car payment!

I have my loans that get forgiven and am on the hook to my parents for their PLUS loan. I would much rather pay the minimum on mine and throw extra to the PLUS that won't go away at all. At least that's the current plan. There is no way the PLUS will be paid off in the next 4 years.

WWMMD? - Paydown

Re: WWMMD? - Paydown

Choose Another Board

Search Boards