finance

[VCU07]

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For those of you who have successfully paid off or are paying off their student loans I have a question. I've paid off about half my student loans in seven years, but still have about 70k remaining. I'm trying to think of ways to get this down asap. I've decided to minimize my 401k contributions to the employer max. I am also contemplating whether I should put a portion that I have saved towards the loans or an investment property. I would prefer a townhouse or condo where I can reliably bring in a few hundred dollars a month in profit, which is completely doable in my area. So, should I do this and let that profit go to student loans or just pay off whatever I can with that down payment?

 

[BMBiology]

Did someone call?

I think renting out a room in an apt that you own is not a bad idea. However I wouldn't buy a property just to rent it out. There is a lot of cost associated with owning a rental property and a lot of headache as well. Supposedly house prices have stabilized and will increase about 3.5% next year (just about the same as inflation when you include property tax).

Paying off debt is pretty much always a good idea unless you think the rate of return in your investment will be higher than the interest rate you are paying. It is not easy to beat 6.8% (after taxes) every year.

 

[Momus]

I'd delay paying as long as possible. 7 years ago your rate probably not 6.8%, probably lower. If it were, then pay it off asap. I'd still max 401k and put any spare money into loans. I don't want to go into discussion why this is still a good idea to max 401k no matter how big your loan and interest are.

 

[trailerpark]

Listen to dave Ramsey...live on beans and rice... you can pay off in 1 year. work overtime. cut expenses. only necessities. no vacation. need to save 3-6 months of emergency funds.

Is a 51 inch plasma a necessity? I think it might be.

 

[Momus]

Is a 51 inch plasma a necessity? I think it might be.

That's what I am using as my monitor. It's a MUST for me. Can't look at my 28 inch monitor anymore.

 

[pezdispenser]

That's what I am using as my monitor. It's a MUST for me. Can't look at my 28 inch monitor anymore.

Is it a 4K TV?

 

[pezdispenser]

I would also recommend the Dave Ramsey method. The principle is that it is better to focus all your energy and become intense on doing one main thing at a time, which in this case is paying off your student loans. Because if you try to do too many things at once, you can't pay attention to all of them and won't get the best returns or the most out of any of the tasks. For example, in your case, you have taken seven years to pay off $70k of principal which is a measly $10k + interest per year. "You've had these loans so long you'd think they're a pet". If you had focused on paying off your student loans from the beginning, with a take home pay of $80k+ picking up extra shifts whenever you could, and living off $30k or less, you could have paid $50k/yr and already paid off your loans in around three years. Then you can shift that same focus and intensity to investing in rentals, 401(k) or whatever. Because you now have $50k/yr free cash flow, which is plenty to max out your 401(k) AND buy a rental or two.

 

[trailerpark]

Right now Kiplinger's Personal Finance Magazine $7/yr. Is it worth it? I'm not familiar with that magazine, but looking for some personal finance stuff and thought that price may be good to get a steady stream of new personal finance info every month. Anyone ever read it? Yay or Nah?

 

[Dred Pirate]

Right now Kiplinger's Personal Finance Magazine $7/yr. Is it worth it? I'm not familiar with that magazine, but looking for some personal finance stuff and thought that price may be good to get a steady stream of new personal finance info every month. Anyone ever read it? Yay or Nah?
View attachment 194974

I used to get it - wasn't for me - I preferred Money magazine

or google (montley fool, etc)

 

[trailerpark]

I used to get it - wasn't for me - I preferred Money magazine

or google (montley fool, etc)

Was it not as helpful as Money? Different focus? I'm more of an amateur on personal finance.

 

[jasonkido]

I would also recommend the Dave Ramsey method. The principle is that it is better to focus all your energy and become intense on doing one main thing at a time, which in this case is paying off your student loans. Because if you try to do too many things at once, you can't pay attention to all of them and won't get the best returns or the most out of any of the tasks. For example, in your case, you have taken seven years to pay off $70k of principal which is a measly $10k + interest per year. "You've had these loans so long you'd think they're a pet". If you had focused on paying off your student loans from the beginning, with a take home pay of $80k+ picking up extra shifts whenever you could, and living off $30k or less, you could have paid $50k/yr and already paid off your loans in around three years. Then you can shift that same focus and intensity to investing in rentals, 401(k) or whatever. Because you now have $50k/yr free cash flow, which is plenty to max out your 401(k) AND buy a rental or two.

Agree with this. Throw everything at it. It will be worth it. I paid off at 55k loan in 8 months. Best thing I ever did. Only have 90k left on mortgage as my only debt. Currently married with a child on the way but I have enough cash to pay it all off today. Just choose not to with current situation

 

[Dred Pirate]

Was it not as helpful as Money? Different focus? I'm more of an amateur on personal finance.

I think it has a different focus -Money has general guidelines, good fund reviews, etc. More for the novice

 

[farmadiazepine]

Live as frugaly as possible. Also work 70-80 hours a week. $70k is very easy to pay off when you are getting paid $65/hr and working 80 hours a week. I know its easy for me to say, and it's hard to do, but that's honestly what I did when I graduated, and I finished paying off my loans not even 1 year out of school. Best decision of my life. Now I don't have to work as much, and I'm taking it easy.

 

[Dred Pirate]

Live as frugaly as possible. Also work 70-80 hours a week. $70k is very easy to pay off when you are getting paid $65/hr and working 80 hours a week. I know its easy for me to say, and it's hard to do, but that's honestly what I did when I graduated, and I finished paying off my loans not even 1 year out of school. Best decision of my life. Now I don't have to work as much, and I'm taking it easy.

agreed - but new grads are having a tough time finding full time employment, let alone 70 hours a week (like when I graduated)

 

[trailerpark]

Where can I find a job that will let me work all this overtime? My job HATES overtime. They accidently gave it to me the first time because they needed emergency coverage on Christmas Eve so I said yes, but I still got a call from my DM who said "o yeah, I forgot, that's why". In today's market there are more job seekers so we don't have that overtime perk.