Author Topic: my student loans... arghh..  (Read 6306 times)

FuckRx

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my student loans... arghh..
« on: September 29, 2013, 01:32:49 PM »

I've attacked my credit cards and only have about 13k left at 0% and I suspect I'll pay that off in the next 1-2 months.
I was hoping to start putting money away towards my FIRE but I just looked at my student loans and I'm getting charged like $270/mo of interest!! I had no idea.
I graduated 2009, It's a 30 year loan at 3% and I owe 117,027.53 with minimum payment of 604.18.
I'm embarrassed to admit that I just found out today that my principal has been going up because since 2009 I was only making partial payments of the interest and the rest was getting added to my principal. This is so frustrating.

LauraG

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Re: my student loans... arghh..
« Reply #1 on: September 29, 2013, 01:47:00 PM »
Is the 3% interest rate on the student loans fixed? While the amount of interest you're paying each month likely hurts, it might be worth considering _not_ paying extra on your student loans and instead investing in a tax-protected index fund. The student loan interest is deductible and it's a very low interest rate.

Also, do you work in public service? If so, you can get your loans forgiven after 10 years of on-time payments. It sounds like you're doing an income-based repayment method, which is good if you're hoping to get loan forgiveness at some point but less useful if you think you're going to end up paying off the entire balance.

If you do not work in public service, have a low enough income that your income-based repayment amount is below the amount needed to attack the principal, and do not expect your income to increase significantly in the next 30 years, you might consider not paying off the loans in anticipation of forgiveness at the 30-year mark.

Catbert

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Re: my student loans... arghh..
« Reply #2 on: September 29, 2013, 01:52:54 PM »
Well it looks like you've been paying 6K or more monthly to kill off your cc debt.  I'd dial back a bit on that so that you pay it off a month or two before the 0% interest period is up.  Now focus hard on the SLs as you have the cc debt.  Depressing I know, buy apparently your education had gotten you a well paying job.

FuckRx

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Re: my student loans... arghh..
« Reply #3 on: September 29, 2013, 01:56:23 PM »
I should have mentioned, my income is a little under 200k so I can't write off any of the interest on the student loans. I won't be able to qualify for loan forgiveness.

FuckRx

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Re: my student loans... arghh..
« Reply #4 on: September 29, 2013, 01:57:38 PM »
ooh I like that idea thanks Mary.

brewer12345

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Re: my student loans... arghh..
« Reply #5 on: September 29, 2013, 02:14:52 PM »
If the loans are fixed at 3%, you might want to reconsider.  I have a 30 year fixed mortgage at 3.5% that I am in no hurry whatsoever to pay off.  That money is better deployed in investments.

FuckRx

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Re: my student loans... arghh..
« Reply #6 on: September 29, 2013, 02:28:28 PM »

It's a fixed interest student loan at 3%, I was fortunate enough to get it refinanced when I was in school and locked in.
I've heard the argument of not being in a hurry to pay back low interest loans but I'm sitting here penny pinching and turning down the heat, never using AC on my car and taking shorter showers to save a little all the while I'm getting the 270 shaft by my student loan company.

Daleth

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Re: my student loans... arghh..
« Reply #7 on: September 29, 2013, 02:36:17 PM »

It's a fixed interest student loan at 3%, I was fortunate enough to get it refinanced when I was in school and locked in.
I've heard the argument of not being in a hurry to pay back low interest loans but I'm sitting here penny pinching and turning down the heat, never using AC on my car and taking shorter showers to save a little all the while I'm getting the 270 shaft by my student loan company.

When you're done paying the cards off, take that money and invest it. You will quickly see that the return you get on your investment is more than what you would save on student loan interest by paying off the loans. Then you shouldn't feel shafted by the student loan company; instead you will hopefully feel like they gave you money almost for free that let you invest and make more money. They're sponsoring your increasing wealth by charging you so little for that outstanding debt.

brewer12345

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Re: my student loans... arghh..
« Reply #8 on: September 29, 2013, 02:38:06 PM »

It's a fixed interest student loan at 3%, I was fortunate enough to get it refinanced when I was in school and locked in.
I've heard the argument of not being in a hurry to pay back low interest loans but I'm sitting here penny pinching and turning down the heat, never using AC on my car and taking shorter showers to save a little all the while I'm getting the 270 shaft by my student loan company.

You are doing all that to generate free dollars that you want to make the best use of possible.  Is that best use paying off the student loans early?  Paying off the cards?  Investing?  Combination of the above?  An exercise for the reader, but either way you will still be cutting down expenses and turning down the heat.  That is how you get those extra dollars regardless of what you do with them.

StarryC

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Re: my student loans... arghh..
« Reply #9 on: September 29, 2013, 03:19:57 PM »
Ok, that does totally suck.  And, everyone is right, at 3% you would do better to invest.  But, if you hate them, and want to be done with them right away that's fine too.

If you are paying $6,000 a month toward credit cards right now, and you redirect it to the loans they would be paid off in 21 months.  Hey, even if you really "scale back" and start taking full length showers and put the heat up to 68 and spend $500 more a month, and only pay $5,500 a month, you'll be done in 22 months.  Also, money isn't all or nothing.  You could pay $3000 a month to the loans and $3000 to investments.  You'd be done with the loans in 3.5 years, and have $126,000 in savings. 

Honestly, I'm all for scrimping, but you've got to do what you feel like you want to.  The cost of a 15 minute shower over a 7 minute shower and 65 v. 68 is probably not going to delay your debt payoff/retirement by more than a few months.  Get the big things right (job, transportation, housing)  and enjoy the little luxuries that matter to you. 

imustachemystash

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Re: my student loans... arghh..
« Reply #10 on: September 29, 2013, 03:29:37 PM »
That's a lot in loans.  I would pay part of them down just to get that looming debt cloud off my head.  I like what StarryC suggested and pay $3,000 to loans and $3,000 to investments. The sooner they are paid off the sooner you will be able to put all your money into investments. Luckily you have a huge income to get out of debt quickly.

FuckRx

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Re: my student loans... arghh..
« Reply #11 on: September 29, 2013, 04:28:42 PM »

This is all really useful to me...
i think i'm going to slow down paying my credit card...
put the rest towards my SL...
then take whatever else i have and invest it...

Zaga

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Re: my student loans... arghh..
« Reply #12 on: September 29, 2013, 05:33:10 PM »
We have large student loans too, and as a compromise between paying all extra money on them and paying only minimums and investing the rest we are doing a bit of each.  To decide how much of each I decided on a timeline for the loans and set a payment to get them paid of by then, then invest the rest.  That date is of some significance to us, but it can be anything that works for you like a significant birthday or anniversary perhaps.

electricworm

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Re: my student loans... arghh..
« Reply #13 on: September 29, 2013, 05:50:09 PM »
$200k income and $117k in loans....you should be able to pay off the loans in a couple of years if you are willing to live cheaply. Sounds like the debt is bothering you...might want to just focus on the debt for now and then when that is gone, you can put all the money that was going towards debt to investing. It won't delay your retirement investing all that long and you will be able to catch up quickly with such a high income. However, if your employer matches, by all means contribute enough to your retirement plan to get the match because that is free money.

MrsPete

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Re: my student loans... arghh.
« Reply #14 on: September 29, 2013, 05:57:48 PM »
I should have mentioned, my income is a little under 200k so I can't write off any of the interest on the student loans. I won't be able to qualify for loan forgiveness.
You're a high income earner -- you should be able to knock out these loans quickly.  You're just not seeing progress because you're more focused on the credit cards (and rightly so). 

A related topic:  this is a great deal of debt for someone just out of college.  Once you're done with this debt, make it a goal not to sell more of your future earnings.  Yeah, right now you have the ability to pay back these debts rather quickly, but it may not always be so.  We've all read stories of people who make big bucks right out of college and buy into a high-income lifestyle, then suffer when it disappears later.  You'll be so much better off buying a moderate house, maintaining a moderate lifestyle . . . And saving those bucks for yourself.  You're safer that way. 

Mazzinator

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Re: my student loans... arghh..
« Reply #15 on: September 29, 2013, 11:33:38 PM »
I'm embarrassed to admit that I just found out today that my principal has been going up because since 2009 I was only making partial payments of the interest and the rest was getting added to my principal. This is so frustrating.

What type of repayment plan are you on? Graduated? Standard? IBR?
Or did you just change repayment types?

zarfus

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Re: my student loans... arghh..
« Reply #16 on: September 30, 2013, 06:22:55 AM »

This is all really useful to me...
i think i'm going to slow down paying my credit card...
put the rest towards my SL...
then take whatever else i have and invest it...

Also consider the 'cost' of carrying a balance on credit cards, at the expense of your credit score.

FuckRx

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Re: my student loans... arghh..
« Reply #17 on: September 30, 2013, 08:11:57 AM »
great points...
so i looked into the CC and it's a $1.50 a month that i would have to pay to carry that balance on my CC...plus the minimum payment but interest rate is 0%.
the first 5 years after i started my loan i was completing residency in medicine so they were just charging me interest payments only and so 4/2014 i will be on a standard repayment plan.