Author Topic: Advice? Student Loans/Credit Card Debt - $26K/yr Income  (Read 1267 times)

IGotsMilk

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Advice? Student Loans/Credit Card Debt - $26K/yr Income
« on: February 01, 2017, 06:07:11 AM »
Hello everyone, I'm new to the MMM community and have been trying to get my finances together as of late and am open to any advice you can give so thank you in advance!

Background on my situation
 -I am in the military and make roughly $26K a year (4 years in)
 -Currently have $42K in private student loan debt w/ 6% interest
   -Paying $300 a month (mostly interest)
 -$24K in federal student loan debt w/ 6% interest
   -Paying $180 a month
 -$7,500 in credit card debt between two cards
   -Paying roughly $200-$250 a month combined
 -No missed payments on anything (thankfully haha)


Due to being in the military, after 10 years served, my federal student loans are forgiven so I have been paying the minimum for those. My private student loans are another story, obviously. I have been doing much better paying off my credit card debt in the last 6 months or so with a few exceptions for unexpected things I had to pay for. I also invest 10% of my salary per month in a retirement plan.

I know it's not a lot of information and I would be happy to share more. Just seeing what advice or knowledge I can gain from the forums. Like I said any help or recommendations would be very much appreciated. Thanks again!
« Last Edit: February 01, 2017, 06:20:57 AM by IGotsMilk »

marielle

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Re: Advice? Student Loans/Credit Card Debt - $26K/yr Income
« Reply #1 on: February 01, 2017, 06:44:27 AM »
It might be easier to give suggestions if you did a full case study:

http://forum.mrmoneymustache.com/case-studies/how-to-write-a-'case-study'-topic/

nereo

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Re: Advice? Student Loans/Credit Card Debt - $26K/yr Income
« Reply #2 on: February 01, 2017, 07:02:55 AM »
Agree that a full case study is necessary for the best feedback.

What are the rates on your two credit cards?
How many student loans do you have and what are the balances on each?
After mandatory expenses and debt payments, what do you have left over each month (you mentioned 10%)?
Can you earn more $ working overtime/part-time?

Lacking more information, I'd say you need to knock out those cc balances ASAP, even if that means cutting back on your retirement contributions.  Target the highest one first and then move on to the second one (avalanche method)
(you are likely paying veyr little in taxes, so the tax savings is minimal and your cc rates are almost certainly more than your tax rate).

Full Beard

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Re: Advice? Student Loans/Credit Card Debt - $26K/yr Income
« Reply #3 on: February 01, 2017, 09:49:41 AM »
A case study would certainly help. 

I'm assuming you're an E-3 and you live on base?  The base pay for an E-4 with 4 years is about $29K.  If you're living on base the good news is you don't have a mortgage or rent to pay.  Once you get off base you should be able to add about $1K or more a month of tax free money depending on your zip code.  At that point I'd try to find roommates and live as cheap as you can and use any extra to work on your debts.  If you plan on staying for 10 years or more your pay should steadily increase with promotions. 

Were you able to finish school with all that debt?  Is an officer route possible?  An O-1E base pay is about $46K

yachi

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Re: Advice? Student Loans/Credit Card Debt - $26K/yr Income
« Reply #4 on: February 01, 2017, 10:10:15 AM »
Can you do Income Based Repayment on the federal student loans and still quality for the 10-year military forgiveness?  Can you refinance the private loans to a lower interest rate or longer repayment period?  If so, you could reduce your payments on these loans to free up money to pay off the credit cards.

I'm assuming here you're having difficulty living on the 26k + free housing, etc.  Otherwise why carry a credit card balance?

I just noticed that you're saving for retirement while carrying a credit card balance.  I wouldn't do that.