Can I get some debt repayment advice?

Question

So I've got 35k in student loans that I'll have to start paying back after I get out of welding school. I have a full-time job, and I'm going part-time, so the loans are on deferment for now. I'm also living at home, so here's the question: Should I start trying to pay them down now, or should I just let them go til I get out of school. If I let them go, I'll have a bigger payment, but I'll also have a larger nest-egg built up for when I move out. What do you think I should do?

Answer 1

If you can afford to pay, pay them as soon as possible

Answer 2

If you are going to have debt, student loans are good debts to have since you can deduct the interest on your taxes. I would save all the money I could for now. I hope that you keep the full time job, work as much as you can and save all you can. When you get out on your own you will have all that money saved up so if you get in a bind, you will have that money for emergency payment money if needed. But you shouldn't have a problem since you should have no problems keeping a job unless you just don't go to work or something like that. Good Luck!

Answer 3

I would pay now if you could you will be glad you did down the road.

Answer 4

Since the loans are on deferment start paying them off AFTER you save up a $1000.00 emergency fund but before you are out of school.  Then start saving your "moving out nest egg".  You need to have an emergency fund because life always happens and it usually always has a price tag.  Here is a plan for you, for now and after you are out of school.  If you work the plan, the plan will work for you and you will retire a millionaire.

1. Make a budget. Make the budget a week before you get paid. A budget is not a punishment! It is a tool which will free you from ever having to worry about money again. Put everything in your budget. Especially those annual, biannual, or quarterly bills like car registration, insurance, etc. Give every dollar you are going to bring home the name of where it is going. Add an "emergency fund" category to your budget for 25 dollars and save up until you have 1000-1250 dollars. Your emergency fund will help keep you from getting into new debt because of an emergency. If you can, set up a direct transfer to a savings account for your emergency fund. That way it moves automatically and you don't even have to worry about it. You must cut your spending and live on less than you make.

2.First get current on all of you debts and make no more late payments. Stop using your credit cards immediately. Do not take on any more debt. Credit cards are like quicksand only the death is much slower. Make a list of all of your debts in order of highest interest rate to lowest interest. Use cash only for your spending from now on.

3.Pay the minimum due on all of your debts and then put your extra money towards paying off the highest interest one first. After you get that one paid off, you put the money you were paying on debt #1 (the minimum payment and the extra payment) towards debt #2. That will pay debt #2 off faster. When that is paid off, you put all three payments towards card #3 and that one will be paid off pretty quickly. As an example:

To start :

Debt #1 (highest interest): minimum payment+ extra payment

Debt #2 (middle interest): minimum payment

Debt #3(lowest interest): minimum payment

Debt #1: paid off

Debt #2: minimum payment from Debt #1+ Minimum payment from Debt #2 +extra payment

Debt #3: minimum payment

Debt #1: paid off

Debt #2: paid off

Debt #3:Mimimum payment from card #1+ minimum payment from Debt #2+ minimum payment from Debt #3+ extra payment.

That way, you will get them all paid off, on time, and pay the least interest. It will also help towards rebuilding your credit since you will no longer have any late payments. This works no matter how many different debts you may have.

4. After you get all of your debts paid off, add to your emergency fund until you have 6-12 months of income saved up. Put that emergency fund money into a liquid money market fund or into a Bank of America no-risk CD so that if you need the money you can take it out without penalty.

5a. When you have your emergency fund in place, add a category for "fun" to your budget. Save for a holiday, a vacation, a big screen, or dinners out, whatever goal you want. Remember to enjoy your life.

5b. When you have your emergency fund in place, start saving for your retirement. Join the 401(k) plan at work and contribute the maximum. Your employer probably matches at least part of your contribution so why give up free money. Open a Roth IRA and contribute the maximum on a monthly basis. If you start saving for your retirement now, you will probably retire a millionaire.

5c. When you have your emergency fund in place, start saving for your next car. Only buy cars, or other things that depreciate, with cash. Save up for a nicer car. That way you get the interest instead of paying the interest.