Author Topic: $202k in student loans - sell my house?  (Read 3834 times)

alondonbridget

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$202k in student loans - sell my house?
« on: October 09, 2018, 07:21:22 PM »
**UPDATE:
I cashed out $5k of my savings and have paid off the small Heartland loan
Still trying to figure out how much cash I should keep in savings (out of the now $20k) and how much I should cash out to get kick-started on the Fed Loan
Yes, I know this amount of debt is crazy and I realize my hair is on fire. Doing everything possible to get it cleared up ASAP
---------------------
New community member, please be patient with me!

I hope you're sitting down: I have over $202k in federal student loans and I have two questions
#1 - Is FIRE really possible when I'm starting out this far in the hole?
#2 - Should I sell my house to accelerate this?

Income notes:
I'm 29 and work in Public Affairs for a tech company
I make $86k/year + about $5k in bonuses gross annually


Student loan notes:
Two student loans...
1) Heartland with $5781.20 at 0% (yes, this is correct - it's a weird one)
2) Fed Loan at over $202k at 7.25%
I started a "debt free journey" last year and have paid off (or saved) over $50k in just under a year. This includes a $25,000 safety net which would cover 1 year of expenses should something happen. It's currently sitting in a Citizens Access savings account
I throw just over $3k at debt each month

House notes:
I have $256k left on my mortgage at 4.25%
750 sq. ft., two bedroom - could rent out the second room for additional income of approximately $500/month
I live in Portland and estimate my home would currently sell for $325k+
My monthly payment including escrow is $1580.42 (my boyfriend lives with me and pays half)

Budget and other lifestyle notes:
I spend $60/week on food
I don't own a car
I spend less than $100/year on clothing, etc.
No credit cards or other debts

Would be honored to hear your advice or provide any additional information.
« Last Edit: October 16, 2018, 07:07:46 PM by alondonbridget »

Paul der Krake

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Re: $202k in student loans - is FIRE possible?
« Reply #1 on: October 09, 2018, 09:00:19 PM »
#1: yes. You have the income to make the debt disappear. Do it.
#2: probably not. Need more numbers than this.

You're in your late twenties which is where people's white collar careers take off (for some). You will likely earn more in the next 5 years.

Have you looked into consolidating/optimizing your debt load already? What are the terms on your debt? What does the rest of your budget look like?

Also what's up
    with your list
        it keeps going to
            the right? It
                is confusing.

alondonbridget

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Re: $202k in student loans - is FIRE possible?
« Reply #2 on: October 09, 2018, 09:33:02 PM »
#1: yes. You have the income to make the debt disappear. Do it.
#2: probably not. Need more numbers than this.

You're in your late twenties which is where people's white collar careers take off (for some). You will likely earn more in the next 5 years.

Have you looked into consolidating/optimizing your debt load already? What are the terms on your debt? What does the rest of your budget look like?

Also what's up
    with your list
        it keeps going to
            the right? It
                is confusing.

Thanks for your feedback. I've fixed the formatting and added more detail around the potential house sale and current mortgage. Is there any other information I could provide to help readers have a clearer picture?

I've looked into refinancing my Fed Loans through a credit union for a lower interest rate but need to get my credit score up a bit first. I'm also hesitant because of the income-based payment plans Fed Loan offers should I lose my job. My company is known for mass layoffs, and while I have no expectations of that any time soon, with $202k and the amount of time it will take me to pay off, it does make me nervous to give up the income-based payment options... Not opposed, just thinking out loud...
« Last Edit: October 09, 2018, 09:35:48 PM by alondonbridget »

MrUpwardlyMobile

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Re: $202k in student loans - is FIRE possible?
« Reply #3 on: October 09, 2018, 09:49:50 PM »
#1: yes. You have the income to make the debt disappear. Do it.
#2: probably not. Need more numbers than this.

You're in your late twenties which is where people's white collar careers take off (for some). You will likely earn more in the next 5 years.

Have you looked into consolidating/optimizing your debt load already? What are the terms on your debt? What does the rest of your budget look like?

Also what's up
    with your list
        it keeps going to
            the right? It
                is confusing.

Thanks for your feedback. I've fixed the formatting and added more detail around the potential house sale and current mortgage. Is there any other information I could provide to help readers have a clearer picture?

I've looked into refinancing my Fed Loans through a credit union for a lower interest rate but need to get my credit score up a bit first. I'm also hesitant because of the income-based payment plans Fed Loan offers should I lose my job. My company is known for mass layoffs, and while I have no expectations of that any time soon, with $202k and the amount of time it will take me to pay off, it does make me nervous to give up the income-based payment options... Not opposed, just thinking out loud...

Youíre basically deciding to pay thousands more for the sense of comfort you get from the possibility of doing IBR if you lose your job and canít find a new job for a year?  I was doing the same thing with $150k student loan debt until I did math and realized that was objectively a bad idea. 

remizidae

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Re: $202k in student loans - sell my house?
« Reply #4 on: October 09, 2018, 09:54:29 PM »
Why do you fear it would not be possible? Yes, it's a lot of debt, but you're young and saving $50k a year. Do you think you can sustain that pace of saving for a few more years?

>I spend less than $100/year on clothing, etc.

What is "etc"? Do you think this is a sustainable level of spending?

As far as refinancing goes, I would run the numbers. Estimate the interest rate you would get from refinancing vs. your current 7.25% (this is high for student loans) and calculate how much per year the higher interest is costing you. Is that worth the security of deferment/forbearance/IBR?

alondonbridget

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Re: $202k in student loans - sell my house?
« Reply #5 on: October 09, 2018, 10:45:17 PM »
Why do you fear it would not be possible? Yes, it's a lot of debt, but you're young and saving $50k a year. Do you think you can sustain that pace of saving for a few more years?

>I spend less than $100/year on clothing, etc.

What is "etc"? Do you think this is a sustainable level of spending?

As far as refinancing goes, I would run the numbers. Estimate the interest rate you would get from refinancing vs. your current 7.25% (this is high for student loans) and calculate how much per year the higher interest is costing you. Is that worth the security of deferment/forbearance/IBR?

I guess I believe that FIRE is possible, it's just a matter of how "early" retirement will actually be for me.
My current savings/debt repayment rate is sustainable and can likely be slightly improved (I think I can tighten my food budget up a bit)

"etc" includes things like shoes, bath towels, kitchen appliances, books, and anything "extra" outside of my fixed needs like housing, utilities, and food

I'll be calling a few credit unions tomorrow to see what kind of interest rate I'd be looking at for refinancing - thank you!

alondonbridget

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Re: $202k in student loans - is FIRE possible?
« Reply #6 on: October 09, 2018, 10:46:30 PM »
#1: yes. You have the income to make the debt disappear. Do it.
#2: probably not. Need more numbers than this.

You're in your late twenties which is where people's white collar careers take off (for some). You will likely earn more in the next 5 years.

Have you looked into consolidating/optimizing your debt load already? What are the terms on your debt? What does the rest of your budget look like?

Also what's up
    with your list
        it keeps going to
            the right? It
                is confusing.

Thanks for your feedback. I've fixed the formatting and added more detail around the potential house sale and current mortgage. Is there any other information I could provide to help readers have a clearer picture?

I've looked into refinancing my Fed Loans through a credit union for a lower interest rate but need to get my credit score up a bit first. I'm also hesitant because of the income-based payment plans Fed Loan offers should I lose my job. My company is known for mass layoffs, and while I have no expectations of that any time soon, with $202k and the amount of time it will take me to pay off, it does make me nervous to give up the income-based payment options... Not opposed, just thinking out loud...

Youíre basically deciding to pay thousands more for the sense of comfort you get from the possibility of doing IBR if you lose your job and canít find a new job for a year?  I was doing the same thing with $150k student loan debt until I did math and realized that was objectively a bad idea.

It's so simple when you put it like that - seriously, thank you. I'll be calling around tomorrow to see what kind of interest rate I can get and refinance it asap.

remizidae

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Re: $202k in student loans - sell my house?
« Reply #7 on: October 09, 2018, 11:01:54 PM »
Why do you fear it would not be possible? Yes, it's a lot of debt, but you're young and saving $50k a year. Do you think you can sustain that pace of saving for a few more years?

>I spend less than $100/year on clothing, etc.

What is "etc"? Do you think this is a sustainable level of spending?

As far as refinancing goes, I would run the numbers. Estimate the interest rate you would get from refinancing vs. your current 7.25% (this is high for student loans) and calculate how much per year the higher interest is costing you. Is that worth the security of deferment/forbearance/IBR?

I guess I believe that FIRE is possible, it's just a matter of how "early" retirement will actually be for me.
My current savings/debt repayment rate is sustainable and can likely be slightly improved (I think I can tighten my food budget up a bit)

"etc" includes things like shoes, bath towels, kitchen appliances, books, and anything "extra" outside of my fixed needs like housing, utilities, and food

I'll be calling a few credit unions tomorrow to see what kind of interest rate I'd be looking at for refinancing - thank you!

Great! Check out the online refinancing places too--credit unions are great for customer service, but IME don't offer the best interest rates.


Linda_Norway

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Re: $202k in student loans - sell my house?
« Reply #8 on: October 10, 2018, 05:30:50 AM »
You could do the math of comparing the total cost of home ownership versus renting a place in the area where you live. That math should include not paying that high interest on your mortgage. And after you have paid off your house, you can start investing in the stock market.

Of course there is always the concern of people for not being in the house market when housing prices are on their way upwards. Do you really expect expect prices to go up forever where you live? From what I have heard in a podcast, in general, house prices don't go up more than inflation if you smear out the price difference over the years you lived there.

freya

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Re: $202k in student loans - sell my house?
« Reply #9 on: October 10, 2018, 06:21:02 AM »
Subject to the limited info in your post, here are my best answers to #1 and #2:

#1:  ABSOLUTELY YOU CAN!!!  I started with a student loan debt of $160K in 2002, so I know the feeling.  With some determination, you'll make progress - never fear.

#2:  If there is no other reason to move, NO DO NOT SELL YOUR HOUSE!!!  Here's why:
- You don't have a lot of equity in it.  Chances are that after closing costs you'll net only about $20-$30K, and then you'll be paying the equivalent of your mortgage interest in rent.  Hardly worth it after you factor in moving costs, etc.
- You say you don't own a car, which means your house is well situated to let you run errands and get to work without one.
- Given enough time (usually 5-7 years) owning is far more cost-effective than renting.
- It will take an enormous amount of time and energy.  You may get a better per-hour profit by investing that time & energy into a side gig.

If you continue as you are, you'll dispose of that debt in about 5 years.  That's not too awful, but here are a few ideas to help speed things up.

1. Look for opportunities for advancement at work, or perhaps move on to another job if needed to increase your income.  This is far and away the most important item on the list.  In fact, it's sufficiently important that your $100/year on clothing budget needs to be increased, as your appearance (especially if you're a woman) is a big factor in how people view you in the workplace.

2.  Definitely refinance that 7% student loan if you can.  If you can't, look for ways to borrow at a lower interest rate and sink the money into the student loan, thus paying it down in chunks while managing multiple lines of debt.  Some ideas:  Look into a HELOC, to unlock whatever equity you can get from your house.  See if you can qualify for credit cards with a 0% introductory balance and a reasonable fee for cash withdrawals.  Just be careful to pay those off before the full interest rate kicks in.  Finally, is it possible to borrow from family members?  Work out a deal where you pay them something like 3% interest.

3. If you have spare time that won't interfere with your pursuit of #1, get a side gig going for extra income.  There are several useful threads on that.  Find stuff in your house to sell, too.

4. Rethink that one year emergency fund.   At your age and in your location, it shouldn't be that difficult to get a new job that at the very least pays your half of the mortgage and weekly spending budget.  Also, consider if you have family who could help you out in a pinch.  That $25K is costing you 7% interest per year to hang onto, or about $1800/year.  Until your student loan is down to something reasonable, you might reduce that fund to 3 months expenses (current costs + COBRA).



FIPurpose

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Re: $202k in student loans - sell my house?
« Reply #10 on: October 10, 2018, 06:45:10 AM »
I agree on not selling your house.

It sounds like you have more house than you need, but not outrageously more. But given all the reasons above, I don't think it's that advantageous to sell.

So +1 from me on:

1. Refinance
2. Cut your living expenses if you can
3. Find some side hustle money (Airbnb a room in your house?)

MrUpwardlyMobile

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Re: $202k in student loans - is FIRE possible?
« Reply #11 on: October 10, 2018, 06:56:46 AM »
#1: yes. You have the income to make the debt disappear. Do it.
#2: probably not. Need more numbers than this.

You're in your late twenties which is where people's white collar careers take off (for some). You will likely earn more in the next 5 years.

Have you looked into consolidating/optimizing your debt load already? What are the terms on your debt? What does the rest of your budget look like?

Also what's up
    with your list
        it keeps going to
            the right? It
                is confusing.

Thanks for your feedback. I've fixed the formatting and added more detail around the potential house sale and current mortgage. Is there any other information I could provide to help readers have a clearer picture?

I've looked into refinancing my Fed Loans through a credit union for a lower interest rate but need to get my credit score up a bit first. I'm also hesitant because of the income-based payment plans Fed Loan offers should I lose my job. My company is known for mass layoffs, and while I have no expectations of that any time soon, with $202k and the amount of time it will take me to pay off, it does make me nervous to give up the income-based payment options... Not opposed, just thinking out loud...

Youíre basically deciding to pay thousands more for the sense of comfort you get from the possibility of doing IBR if you lose your job and canít find a new job for a year?  I was doing the same thing with $150k student loan debt until I did math and realized that was objectively a bad idea.

It's so simple when you put it like that - seriously, thank you. I'll be calling around tomorrow to see what kind of interest rate I can get and refinance it asap.

I recommend Earnest because I repeatedly found their rates to be lowest for me.  If you use my referral link, theyíll give you $200, which is basically a free $200 to make an extra extra payment.
http://www.earnest.com/invite/r4xe7

Iím told other people often use SoFi but I found their rates expensive at the higher levels of debt that you currently have and that I previously had.

marty998

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Re: $202k in student loans - sell my house?
« Reply #12 on: October 11, 2018, 05:49:43 AM »
Another vote from me to keep the house. And as others alluded to, you will likely double up your income through marriage and turbocharge it through career growth. The economies of scale of both of those should see you paying down debt pretty easily.

You just gotta put your head down for a while, cover your nose while you swim through that river of shit until the debt monkey is beat. It's not going to be the task that gives you a lot of joy in the interim, but it will set your life up to be easier down the track.


I'm 29 and work in Public Affairs for a tech company


Ahh. So you're one of those people who try and convince us tech companies are good and warm and fuzzy and are not out to steal as much of our personal details as possible and flog it off to every advertiser in the world?

:D

AMandM

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Re: $202k in student loans - sell my house?
« Reply #13 on: October 11, 2018, 08:16:21 AM »
Based on the numbers here, of course you can FIRE!

If you can save $50k a year on your $90k income, that implies your annual spending is $40k. If you can keep your spending at that level, then (a) your student loans will be gone in four years (or less, if your income goes up) and (b) in less than 15 more years you'll have a stash of over $1M, enough to support $40k spending at the 4% withdrawal rate.

No need to sell the house.

Congrats!

ysette9

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Re: $202k in student loans - sell my house?
« Reply #14 on: October 11, 2018, 09:29:48 AM »
I’ll chime in as well and vote on not selling your house. Isn’t your area one where you have seen sustained price inflation in housing? I love in a HCOL area where appreciation in housing far outstrips inflation and even outstripped our very healthy income gains in our early 30s (prime career earning years). Unlike almost every other area of the US, in areas like that it does make sense in the long term to buy when you can get a toe in the market and then hang on for dear life.

I do think renting out that other room is a good idea. If such a thing exists where you are, you could rent during the week to commuters. A friend did that with her two extra bedrooms which meant she had commuter roommates during the week who went home to their regular, far-flung homes on the weekend. Best way to balance extra income while not having people underfoot all the time. AirBNB is another way to do that, though more work on your end. Even if you have a roommate now for just a couple of years that would help tackle those loans and position you really well later. Good luck.

alondonbridget

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Re: $202k in student loans - sell my house?
« Reply #15 on: October 14, 2018, 06:50:19 PM »
Based on the numbers here, of course you can FIRE!

If you can save $50k a year on your $90k income, that implies your annual spending is $40k. If you can keep your spending at that level, then (a) your student loans will be gone in four years (or less, if your income goes up) and (b) in less than 15 more years you'll have a stash of over $1M, enough to support $40k spending at the 4% withdrawal rate.

No need to sell the house.

Congrats!

You've given me hope. Thanks for keeping it real and to all the fellow mustachians who commented for inspiring me to keep going and not take a "short" cut. On another note, I rode my bike over 15 miles yesterday, commuting around town. Stache stubble is coming in already...

alondonbridget

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Re: $202k in student loans - sell my house?
« Reply #16 on: October 14, 2018, 06:55:14 PM »
Another vote from me to keep the house. And as others alluded to, you will likely double up your income through marriage and turbocharge it through career growth. The economies of scale of both of those should see you paying down debt pretty easily.

You just gotta put your head down for a while, cover your nose while you swim through that river of shit until the debt monkey is beat. It's not going to be the task that gives you a lot of joy in the interim, but it will set your life up to be easier down the track.


I'm 29 and work in Public Affairs for a tech company


Ahh. So you're one of those people who try and convince us tech companies are good and warm and fuzzy and are not out to steal as much of our personal details as possible and flog it off to every advertiser in the world?

:D

I won't be getting married (ever). But I do have hopes (and plans!) to increase my income. Definitely ok with swimming through the shit. This year was my first rev. at it and I'm confident I can power through it over the next few years. And yes, tech companies are the worst :) But big paychecks are nice :)

OvertheRainbow

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Re: $202k in student loans - sell my house?
« Reply #17 on: October 15, 2018, 08:13:37 AM »
With that much in student loans, FIRE should be the furthest thing from your mind as your hair is on fire.

How much of a stash do you have now?

civil4life

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Re: $202k in student loans - sell my house?
« Reply #18 on: October 15, 2018, 01:11:23 PM »
Yes and No

If you want to check, rent vs own calculator.  https://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html

More on the student loans.  Sounds like you need to take a few months to build your credit score. 

I refinanced mine through SOFI.  I went from a 6.8% fixed to a 3.2% Variable rate 5 year loan.  If you want here is a referral link.  If you do refinance it would include a $100 bonus.  They usually will match other interest rates from their competitors.  www.sofi.com/share/397543?src=copy

Check out the Givling App. It is a trivia app that funds student loan repayment.  My referral link is in my signature.

I agree with the emergency fund being high.  Cut in half at least.  Then put the E fund in an online high yield savings account.  I use CIT, but Ally is good.

babybug

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Re: $202k in student loans - sell my house?
« Reply #19 on: October 15, 2018, 07:22:25 PM »
Also, I think especially with refi to a low interest, it would still be very beneficial to put away 401(k) type savings at least to employer match if not to max.

Sent from my KIW-L24 using Tapatalk


brooklynmoney

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Re: $202k in student loans - sell my house?
« Reply #20 on: October 15, 2018, 08:54:53 PM »
What kind of public affairs happens in Portland? Get thee to Silicon valley or DC and I would think you could almost double your salary (assuming you have something like a law degree or MPA.

Kayad

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Re: $202k in student loans - is FIRE possible?
« Reply #21 on: October 19, 2018, 03:12:50 AM »
#1: yes. You have the income to make the debt disappear. Do it.
#2: probably not. Need more numbers than this.

You're in your late twenties which is where people's white collar careers take off (for some). You will likely earn more in the next 5 years.

Have you looked into consolidating/optimizing your debt load already? What are the terms on your debt? What does the rest of your budget look like?

Also what's up
    with your list
        it keeps going to
            the right? It
                is confusing.

Thanks for your feedback. I've fixed the formatting and added more detail around the potential house sale and current mortgage. Is there any other information I could provide to help readers have a clearer picture?

I've looked into refinancing my Fed Loans through a credit union for a lower interest rate but need to get my credit score up a bit first. I'm also hesitant because of the income-based payment plans Fed Loan offers should I lose my job. My company is known for mass layoffs, and while I have no expectations of that any time soon, with $202k and the amount of time it will take me to pay off, it does make me nervous to give up the income-based payment options... Not opposed, just thinking out loud...

Youíre basically deciding to pay thousands more for the sense of comfort you get from the possibility of doing IBR if you lose your job and canít find a new job for a year?  I was doing the same thing with $150k student loan debt until I did math and realized that was objectively a bad idea.

You could also split the baby to some degree, by refinancing only part of your student loans privately.  Even 50k at 3.5% versus 7% is a big savings.  Look at earnest, Sofi, etc.  And look at their options for forbearance too.


freya

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Re: $202k in student loans - sell my house?
« Reply #22 on: October 21, 2018, 09:31:11 AM »
Thanks for the update!  I like how you did that at top of the thread.  Do it again next time!  More news please!

You paid off the 0% Heartland loan??  Sigh.  Was that 0% on a timed expiration schedule?  Whatever, if it motivates you to get cracking on the Federal loan it's a good thing.


lhamo

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Re: $202k in student loans - sell my house?
« Reply #23 on: October 21, 2018, 11:12:15 AM »
Definitely consider getting a roommate.  Your space is small, and already has two people in it, so if you could find a commuter who only needs a place to crash M-Th, or someone who travels a lot for work (consultants, flight attendants, etc), or who works long hours (medical resident, etc) and charge them a bit less than market, that might be win-win for everybody.  I'm surprised you think $500 is market rate, though -- up here in Seattle that would be a steal even for a small place shared 3 ways.

alondonbridget

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Re: $202k in student loans - sell my house?
« Reply #24 on: October 23, 2018, 07:34:41 PM »
Thanks for the update!  I like how you did that at top of the thread.  Do it again next time!  More news please!

You paid off the 0% Heartland loan??  Sigh.  Was that 0% on a timed expiration schedule?  Whatever, if it motivates you to get cracking on the Federal loan it's a good thing.

I know, I know -- it's really stupid to pay off the 0% Heartland one but it was more of a momentum thing for me. Just wanted to clear the little one out of the way before focusing hardcore on the single FedLoan.

Still considering selling the house against the good advice left above. If MMM is correct in his estimates that another recession may be coming within the next two years, I don't want to be stuck with this house while trying to pay off student loans and concerns around layoffs at work, etc. I eventually (in the next 5-10 years) plan to move to Pittsburgh to be closer to family and just don't want to end up trying to sell during a recession.

Pay day is next Wednesday and bonus day is next Thursday so I'll be making my first extra-large Fed Loan payment then! 

alondonbridget

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Re: $202k in student loans - sell my house?
« Reply #25 on: October 23, 2018, 07:46:17 PM »
Definitely consider getting a roommate.  Your space is small, and already has two people in it, so if you could find a commuter who only needs a place to crash M-Th, or someone who travels a lot for work (consultants, flight attendants, etc), or who works long hours (medical resident, etc) and charge them a bit less than market, that might be win-win for everybody.  I'm surprised you think $500 is market rate, though -- up here in Seattle that would be a steal even for a small place shared 3 ways.

This is really great advice on finding someone who's lifestyle would be conducive to us sharing our small space with a 3rd person. I've been keeping an eye on Craigslist to see what rooms in houses are renting for in our neighborhood and, since we're around 15 minutes from downtown with less than stellar public transit options, $500-$700 is about right, depending on what utilities are included, etc.

freya

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Re: $202k in student loans - sell my house?
« Reply #26 on: October 23, 2018, 09:55:53 PM »
Still considering selling the house against the good advice left above. If MMM is correct in his estimates that another recession may be coming within the next two years, I don't want to be stuck with this house while trying to pay off student loans and concerns around layoffs at work, etc. I eventually (in the next 5-10 years) plan to move to Pittsburgh to be closer to family and just don't want to end up trying to sell during a recession.

You should of course do as you think best, but I suggest you keep these points in mind:

- Attempts to predict the future of the stock market & economy are almost always wrong - either that, or trivially correct in that a recession is bound to happen if you wait long enough.  If the person predicting a recession were that confident in his predicted timeline, he wouldn't be telling you about it.  He'd be quietly positioning himself to profit handsomely.   Yogi Berra got it right.  So did Harry Browne ("Why the Best-Laid Investment Plans Usually Go Wrong").

- If your home value were to drop and you decide to move, you'll always have the option of renting it out rather than selling.  Lots of people did this in the aftermath of 2008.

lollipop_hurricane

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Re: $202k in student loans - sell my house?
« Reply #27 on: October 24, 2018, 03:23:40 PM »
I would stick with the IBR plan instead of consolidating.  If the laws are still the same, you can deduct the interest from the student loan, and after 20 years of paying on time, regardless of whether there is a balance left, you will be forgiven the remaining balance.  You can ALWAYS pay more than your minimum payment. 

ATR

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Re: $202k in student loans - sell my house?
« Reply #28 on: October 26, 2018, 11:36:54 AM »
PTF

Telecaster

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Re: $202k in student loans - sell my house?
« Reply #29 on: October 29, 2018, 01:49:41 PM »
Still considering selling the house against the good advice left above. If MMM is correct in his estimates that another recession may be coming within the next two years, I don't want to be stuck with this house while trying to pay off student loans and concerns around layoffs at work, etc. I eventually (in the next 5-10 years) plan to move to Pittsburgh to be closer to family and just don't want to end up trying to sell during a recession.

I don't want to speak for MMM, but I really don't think he was specifically predicting a recession within a certain time frame.   What he said (correctly) was that we are experiencing a very long economic expansion, and if history is a guide, we should expect the expansion to end at some point reasonably soon in the future, just because all expansions end at some point.  The article was written almost a year and a half ago, by the way.   

Keeping that in mind, most recessions are fairly short (although employment can take a long time to recover).    If you really think there will be a recession in two years, but your timeline for moving is 5-10 years, then you should be unaffected.   And if your timeline really is 5-10 years, then it sounds like there is lots of flexibility in your plan, and you could wait an extra year or two to sell the house if it came down to that.

One thing I haven't seen in this thread (I haven't read all the posts so I may have missed it), is how much will it cost you to rent a place instead of owning?  I'm not sure what the rental market is in Portland, but I'm guessing it is pretty close to a wash.  In that case, you definitely should keep the house, because rents will continue to increase over time, but your mortgage is fixed (taxes and insurance of course will go up).   In other words, the longer you stay in your house, the lower your relative cost of living becomes (rare exceptions noted). 

In the meantime, one thing you should do is revisit your thought process and mindset and find out what caused you to make the mistake of paying off the 0% Heartland loan.   That was a flat out blunder.  Not a critical blunder, but definitely the wrong thing to do.   It sort of sounds like you are trying to talk yourself into the selling the house, which much more of a grey area, but likely a mistake as well.   Think about what it is you are really trying to do, and the best way to get there.  Good luck and keep us posted. 








Rosy

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Re: $202k in student loans - sell my house?
« Reply #30 on: November 01, 2018, 12:57:39 PM »

One thing I haven't seen in this thread (I haven't read all the posts so I may have missed it), is how much will it cost you to rent a place instead of owning?  I'm not sure what the rental market is in Portland, but I'm guessing it is pretty close to a wash.  In that case, you definitely should keep the house, because rents will continue to increase over time, but your mortgage is fixed (taxes and insurance of course will go up).   In other words, the longer you stay in your house, the lower your relative cost of living becomes (rare exceptions noted). 

In the meantime, one thing you should do is revisit your thought process and mindset and find out what caused you to make the mistake of paying off the 0% Heartland loan.   That was a flat out blunder.  Not a critical blunder, but definitely the wrong thing to do.  It sort of sounds like you are trying to talk yourself into the selling the house, which much more of a grey area, but likely a mistake as well.   Think about what it is you are really trying to do, and the best way to get there.  Good luck and keep us posted.

Telecaster made some excellent points about your house - here is another vote for not messing with a good thing. Leave well enough alone and concentrate on paying back the student loans. That is your only real problem. Pay it off with every bonus and pay increase you will accumulate going forward.

The feeling I got when reading your post was here is someone who just woke up to RL - financially speaking - and is totally freaked out. As in - let's just pay off that 5700 dollar loan at zero percent - because, why?
Wouldn't that be the one and only loan you simply set and forget on whatever minimum payment you can get away with because it cost you nothing at all in interest? It practically pays itself off in time - totally without any real effort on your part. That's the beauty of zero interest and auto pay.

We get it - you just proved to yourself that you can knock out a nice chunk of debt quickly and without pain, probably felt good too, for about five minutes until you looked at the real problem.
Next time try looking purely at the math - be pragmatic.

It will be a huge improvement if you can refinance the student loans. So where are you on that? No idle questioning without follow-through action is allowed:) Do it and be done with it - one stroke of the almighty banker pen and you owe thousands less. Sweetness.

You make plenty of money and you don't seem to have an expensive lifestyle, so you are all set to kill that debt within five years or less. Your salary will undoubtedly increase in the future, but if shit happens and it will - you do what you need to do. You'll be fine. Having a decent emergency fund gives you options and buys you time.
You have a great education, a good job and a nice house in the hottest real estate area in the country - and - you are now addressing the only fly in the ointment.
Congrats - in five years those debts will be history.

So now then, when is your new tenant moving in? That $500 could already be going toward your big a$$ loan. JDI - or have one more long look at your own motivations and your own values and truth. FIRE isn't happening anytime soon, but for every brilliant financial move you make now those Fire options in your future might significantly improve.