Hello fellow Mustachians-
First post here, but a long time follower of MMM. I have some student loans that I've been recently fallen behind on and previous to that was struggling to make minimum payment. I'm 26 yrs and left my previous employer of 3.5 years @ $39K base rate. The employer was 401K matching up to $2500, 20% vesting annually. I've never been great at saving but I contributed about $3000 annually since the match was part of my compensation. I started a new job several months ago that seems to be going well. My new base rate has increased to $53K and they offer quarterly profit sharing in place of retirement plan.
My student loans are kicking my butt, even with the new pay increase. I'm seriously considering chopping them down by 2/3. Highest interest first of course. This would eliminate almost 50% of my debt to income ratio and boost my credit substantially, allowing me to get more done at earlier point in my life. I've been rebuilding my credit since I co-signed on a sibling's auto around age 20 that I got burned on. I've since had a successful auto loan, and half way through a second one. Credit is hovering at 600
My current 401K stats are:
Vested Balance: $13,680.59
401K Loan Balance: $994.62
Taxable Amount: $12,685.97
Because uncle Sam is going to get his share either now, or when I retire, these taxes are irrelevant to me
Federal Tax: $2,736.12
State Tax: $273.61
Estimated Payout: $9676.24
Student Loans:
$6,205.06 @ 6.8%
$2,635.71 @ 6.8%
$4,085.11 @ 5.6%
$1,272.09 @ 5.6%
$1,071.93 @ 4.5%
Other loans:
Auto Loan: $18,100 @ 8.9% (43 months left)
Now, comes the IRS 10% penalty since I'm not 59-1/2 years old. I've calculated approx $960 due at tax season. I'm planning to offset this amount with the $2500 student loan payment credit. Sorry to make this so long. Trying to make an informed decision about my financial future.
Thanks!
GhengisT