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$202k in student loans - sell my house?
alondonbridget:
**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.
Paul der Krake:
#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:
--- Quote from: Paul der Krake 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.
--- End quote ---
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...
MrUpwardlyMobile:
--- Quote from: alondonbridget on October 09, 2018, 09:33:02 PM ---
--- Quote from: Paul der Krake 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.
--- End quote ---
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...
--- End quote ---
You’re 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 can’t 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:
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?
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