Hello all, I’m early 30s and graduated from a full-time master’s program in spring 2012. I’m currently holding ~$27k of student debt (down from $68k in March). I made myself a fun amortization table and with my income and expenses should have it paid off by late Feb 2014. I would love to have it paid off sooner if possible though. These are fed loans and the interest is at 6.55% (ouch!) but since it looks like I have only about 4.5 months left not sure it’s worth it to try to refinance. I have no other debt.
I made the move to have the minimal amount of fed withholding on paycheck (WA does not have a state income tax) so I could have more take home pay as in more money to throw at the loan now not later. Of course this means I will have a pretty big bill from Uncle Sam in April. That’s fine I’d rather get an interest free loan then give one.
Using the withholding calculator on the IRS site, it calculated $6900 in taxes owed. Not a problem I have that much on hand but here’s the main question-
I have some stock that I purchased a couple years ago at about $2100 and now it’s worth about $600. The stock plummeted in the fiscal crisis and has never recovered. It’s not doing me any good sitting there and I feel selling it now and putting $600 toward my loan and having $1500 capital loss when I file my taxes is better than waiting for it to maybe be worth $700 in a year. I’m embarrassed I’ve been sitting on it so long but better late than never, right?
Oh for context this is NOT retirement money. That’s an entirely separate account. Only $40k today – hey late bloomer – but I’m now maxing it out and taking full advantage of employer matching. In my pre grad school days I had some money to play with (and neglected retiremen - face punch!) so I opened an etrade account. I didn’t use the money for grad school because it was seriously bottomed out when I was in school. Most of the portfolio has now recovered except for this guy.
To head off questions here is some budget info. Don’t feel like outlining every detail but broad strokes:
INCOME
Take home pay: $5600-$6100/month (my role qualifies for overtime and typical work week at my job is 45 hours. $5600 is if I worked 40 hours a week all month). I have a bonus of a couple thousand in Jan that will all go to the loan.
EXPENSES
Rent: $1095 includes parking and W/S/G
Utilities - electricity, heat and internet: average $80/month and paid by cc (see below).
Phone: $0 (work pays cell, no landline)
Insurance: $0 (work pays premiums) I have $150 in a flexible spending account (pretax payroll deductions) and out of pocket medical expenses (co-pays, some prescriptions, contact solution) in 2013 are currently at $48.
Car: Compact car (year 2000). Paid cash for it. 127k miles and in good shape. Drive maybe once a week. I walk to work and live in a very walkable/transit friendly neighborhood. I could get rid of it but not ready to take the leap yet. All expenses - gas/registration/insurance/oil changes - paid by cc.
ATM withdrawals: average $100 month
Credit card payment: $60/month. I recently started using a 0% APR card. Since my first cc, I’ve been the type to use plastic anywhere and everywhere and until this past August, I have never not paid a credit card bill in full. Then I got an offer for 0% APR for 21 months and it seemed like a good way to accelerate paying off my loan.
That’s basically it for expenses like I said everything but rent, student loan, and the occasional cash purchase gets paid by card. I know there’s fat to be trimmed from all that but for now I just want to get feedback if my sell stock for loan idea is a good move. Thanks for reading!
