Considering Saving to payoff student loan....

MDG099 · ‎12-06-2009

I took out a $20,000 private student loan in 2006 and recently been in contact with the company who holds my loan. My current interest rate is at 6% but is variable and I owe almost $30,000 now. I will be starting a job next week making approximately $2300-2500/month. I will be living with my parents so I dont have rent, utilities, expenese, etc....my current debt besides the loan is $1700 between 2 cc's and my $2,000 car loan which my parents will be paying off for my "Christmas present." Unfortunately I have been very irresponsilbe in my past, but am making changes and want to totally pay off that student loan, or at least most of it before I move out of my parents to finish my bachelors degree in a year and a half. I'm thinking of saving about $1800/month to go towards my student loan debt, but am not exactly sure how to go about it. I've been with Wells Fargo for a few years and they offer CD's for 19months at .90% with a minimum deposit of $5,000. I was wondering if anyone had any other suggestions? I really want to get this student loan out of the way before I go back to school for my bachelors so I don't have this debt lingering over my head after college. If anyone has any suggestions please let me know! Thanks!

BTW, the loan is not in repayment and won't be until 2011, so I'm currently in grace period.

Also, another tidbit to add. My cosigner on the loan is very close to claiming bankruptcy, how will this effect me and/or the loan?

Message Edited by MDG099 on 12-06-2009 08:48 PM

Message Edited by MDG099 on 12-06-2009 08:52 PM

Jazzzy · ‎12-07-2009

@MDG099 wrote:
I took out a $20,000 private student loan in 2006 and recently been in contact with the company who holds my loan. My current interest rate is at 6% but is variable and I owe almost $30,000 now. I will be starting a job next week making approximately $2300-2500/month. I will be living with my parents so I dont have rent, utilities, expenese, etc....my current debt besides the loan is $1700 between 2 cc's and my $2,000 car loan which my parents will be paying off for my "Christmas present." Unfortunately I have been very irresponsilbe in my past, but am making changes and want to totally pay off that student loan, or at least most of it before I move out of my parents to finish my bachelors degree in a year and a half. I'm thinking of saving about $1800/month to go towards my student loan debt, but am not exactly sure how to go about it. I've been with Wells Fargo for a few years and they offer CD's for 19months at .90% with a minimum deposit of $5,000. I was wondering if anyone had any other suggestions? I really want to get this student loan out of the way before I go back to school for my bachelors so I don't have this debt lingering over my head after college. If anyone has any suggestions please let me know! Thanks!

BTW, the loan is not in repayment and won't be until 2011, so I'm currently in grace period.

Also, another tidbit to add. My cosigner on the loan is very close to claiming bankruptcy, how will this effect me and/or the loan?

I'm confused. Instead of saving in order to pay the loan, is there any reason you can't just start paying the loan? If you can start whittling this amount down now, do that. Don't save money at .90% while you are owing 6%.

Is there a reason you would want to wait until 2011 to start paying?

MDG099 · ‎12-07-2009

No, you're right, I can start paying the loan, I was just considering my other options, but now that you put it that way it's probably best to pay it now. However, I have to pay my CC's off first, then start paying on my student loan.

Do you know if my cosigner claiming bankruptcy would put my loan into payment?? Or can I continue with the deferrement while still paying the loan off?

Message Edited by MDG099 on 12-07-2009 09:09 PM

Jazzzy · ‎12-08-2009

@MDG099 wrote:
No, you're right, I can start paying the loan, I was just considering my other options, but now that you put it that way it's probably best to pay it now. However, I have to pay my CC's off first, then start paying on my student loan.

Do you know if my cosigner claiming bankruptcy would put my loan into payment?? Or can I continue with the deferrement while still paying the loan off?

I think it's a very good idea to get rid of the credit card debt and then move on to the student loan. You've watched as a lot of interest has accumulated, and it's best to get the balance due started down rather than watching it climb even higher. You'll want to reach other financial goals in your life...more schooling, a home, etc. Putting that debt behind you sooner rather than later will feel good.

I don't think that a cosigner claiming bankruptcy will put your loan into repayment. For what reason have you been granted the deferment? If that reason hasn't changed, I don't think your deferment status will change. School loans can't be written off in bankruptcy. I doubt your cosigner will be able to write off that commitment.

MDG099 · ‎12-08-2009

Lynette,

Thank you for such a speedy reply! I'm in my grace period till May 2010, but since I will be continuing school still they would put my loan in in-school deferment until October 2011. After that, I can go into forbearance for a max of 12 months. I really want to payoff the loan and I hope I can do it while I'm living with my parents, it would take such a huge load off my shoulders!

Jazzzy · ‎12-08-2009

@MDG099 wrote:
Lynette,

Thank you for such a speedy reply! I'm in my grace period till May 2010, but since I will be continuing school still they would put my loan in in-school deferment until October 2011. After that, I can go into forbearance for a max of 12 months. I really want to payoff the loan and I hope I can do it while I'm living with my parents, it would take such a huge load off my shoulders!

I thought of one more thing...if you can tolerate one more piece of advice...

It's important to get the credit cards paid off and to start paying on the school loan. What I hadn't mentioned, however...and it's really important...is to start saving towards an emergency fund for yourself. I know that living with your parents can lessen some of your financial pressure, but if you were to have an emergency, such as a car repair...you don't want to have to resort to your credit cards to pay it off.

It's good to have at least three months of expenses put away in a separate savings account. If you pay EVERYTHING towards credit cards and school loans, you could end up digging deeper into a hole.

Sounds as if you're making all the right moves. You don't want to look back after you've lived with your parents and wonder what you did with all your money.

MDG099 · ‎12-08-2009

I'm not 100% sure of how much I will be making when I start this new job because it is a top position in Vegas. $12.09/hr plus tips. Also, I'm kinda scared they may lay off people, and I definitely don't want to be one of those people! Anywho, would it be smart to put my income tax return check towards student loan or savings/emergency fund?

Jazzzy · ‎12-08-2009

@MDG099 wrote:
I'm not 100% sure of how much I will be making when I start this new job because it is a top position in Vegas. $12.09/hr plus tips. Also, I'm kinda scared they may lay off people, and I definitely don't want to be one of those people! Anywho, would it be smart to put my income tax return check towards student loan or savings/emergency fund?

I'd say the emergency fund until you have what you consider to be 3 months expenses put away. Then the school loan.

MDG099 · ‎02-18-2010

Okay, here's an update and I am in need of some serious advice.

Everything didn't go as smoothly as planned in the transition to the new job. I was working full-time when I started 2 months ago, but now they cut hours. So now my monthly income is about $1500-$1700. Also, I had to add onto the CC debt, I had to get dental work done which put me an extra $2500 in the hole.

Current cash: $2700 including $700 in savings

My CC debt: $3,450

CC1: $950 No interest till May 2010

CC2: $2500 No interest for 18 months

Student Loan: $30,000 @ 6% interest

So, I'm not really sure what to pay off first. I just want to put all this horrible debt behind me! Another thing im somewhat afraid about is currently I'm living with my parents rent free, but when I move out in Spring or Summer of 2011 I will be moving back to Cali to go to school and have to start at square 1. So, I'm not exactly sure how much I should be putting in my savings, to be able to stay afloat when I move back to Cali. At this point, my current job is not secure, so I'm really unsure of where to be putting my money. Any help would be appreciated. Thanks!

Message Edited by MDG099 on 02-18-2010 11:31 PM

Message Edited by MDG099 on 02-19-2010 09:37 AM

Jazzzy · ‎02-19-2010

When you move to California to go to school, do you plan to do that with the help of more school loans? You need to know whether you have to save the money for the move or whether those expenses will be covered by more school loans.

Also, you talk about moving in 2011. Are you able to get a 2nd job between now and then...or a different job? Living at home is a time during which you should be trying to rack up as much cash as possible. That's tough to do with your debt vs. your income.