Student Loan Debt & Saving

[kylam8]

I'm a 23-year-old with a hefty amount of student loan debt (currently around $51,000). I am very organized, budget wisely and live below my means. I don't usually spend money outside of what I allocate for my bills, loans, and expenses like groceries. I try to live frugally and live modestly but I still feel like despite my salary of $33,000, I can't quite get a handle on paying down my loans OR building up my savings. I had $1,000 emergency savings, but most of that money has gone towards my car, which needed immediate repairs (and believe me, I'd love to live without a car, but I currently live in a city where that's really not possible). I DO make sure that I am contributing to a personal IRA each paycheck, as well as setting aside as much money as I can for savings. Do you have any suggestions for a twenty-something struggling with student loan debt?

[lauren_knows]

Do you have any suggestions for a twenty-something struggling with student loan debt?

Other than doing what you're already doing... increase your income in any way possible.

I know that statement is a bit glib, but it's the truth.  Unless you have amazing benefit plans, it will probably behoove you to gain 1-2 years of experience, and look for another job at another company.  It's a sad state of affairs, but the truth is that companies value a new employee (with similar education/experience) than a current employee.   Alternatively, you can see if your company gives tuition reimbursement, and you can possibly get a Master's degree that is relevant to your field... all on the company dime.

I would say keep plugging along, and look for opportunities when they arise.

[simonsez]

I'd say for now be patient and wait for your salary to rise.  I assume you are using your degree and it just takes awhile for higher salaries corresponding with your experience to kick in (or to be negotiated).  Otherwise, I know of jobs that require only a CDL and some "industrial experience" that pay better than 33k.

Do you have a significant other or someone you could room with?  There are SIGNIFICANT economies to scale in living with someone else, even if it is just a roommate or two that you hardly know (but do your homework).

If your loan debt is federal, stay on the standard plan (for now) if you can but you can always switch to the extended, graduated, extended-graduated, ISR, IBR, or ICR plans temporarily if you are in a bind (or even defer I guess but always better to be paying at least something).  This is only feasible if your income will be going up in the years to come.  If your job's salary is going to stay low and it's work that you can't give up for some reason(s), then I suggest making sure you work somewhere that has a loan repayment benefit/program.  Don't panic, just know this process will take years.  I went to grad school and started off with 85k in loan debt and couldn't find a job for 7 months but now it's more manageable even though the debt emergency alarms are still going off in the brain.  It's a marathon, not a sprint when you start off your career with a salary that is lower than your debt amount.  Good luck.

[stealmystapler]

Kylam, I'm in a similar boat. After finishing up my Master's, I had about $40,000 in loans. After 6 months of job searching, I found a job in my field that didn't require a move but at only 35K.

Paying off the loans is definitely an exercise in patience and frugality, and I can definitely relate. I have been picking up infrequent consulting jobs through local connections, and they've been helping to make a dent. Between myself and my husband, we'll be able to pay more than the minimums on our loans plus begin to sock away money for a down payment on a house. There is definitely something to Simon's economies of scales point.

At the very least, all this hard work will set us up for an excellent savings rate once we get on the other side of 0 net worth!