Student Loans- pay them off?

[deerhart]

Oh boy, don't tell me that! So far my car is alive and kicking and I'm hoping to get a minimum of another 2+ years out of her. Of course, I have put a lot of money into her, but all I've put in is still cheaper than a new car. My main concerns are more about driving a safe car with my DD8. Not that my Honda isn't safe, but there have been a lot of technological and safety advances since 1997.

well my contour the transmission blew to the tune of $4k (which of course I didn't have) so we bought the taurus. The s-10 (brakes) was my parents car and when it died we just stayed at one car (and drove the taurus to death). The taurus got totaled in 07 when I had 5 payments left on it at 105k (was SOO excited) when we got t-boned. Then last summer the ranger had the fuel pump go out (again my parents old car) and since we were going to purchase DH a new vehicle towards the end of the year anyway (completely done with daycare except during summer for the first time), I used the money to fix the thing as a down payment for a car for him.

For us, I think its just bad bad luck and the fact that I put a ton of miles on quickly (my current car will be 3 years old in November and already over 50k, I bought it with 0 miles on it) as I put anywhere from 500-1000 miles a month on just for business driving (not including my commute and any other driving I do). But on the flip side, my mileage check each month pays my car payment.

 

[riley2008]

Seriously, a lot of people are scared of debt. Period. And it is a scary thing, unless you already have the money to pay it off or you can make it work in your favor.

I'd consider where you want to be in say, 5 years. If your student loans don't have a fluctuating interest rate, then sock that extra money away into something that would make MORE than the interest is costing you. That's free money, but you have to be self disciplined. If you know you're not, then PAY IT OFF ASAP.

When I had student loans I only paid the minimum while I "saved for a rainy day". Then my work sent me back to school for about 2 years. I was eligible for a subsidized deference. (I would have made a completely different decision if my deference would have acrued interest.) I took it without blinking and stashed that money away into savings too. After school was over, I just paid the whole thing off because I just didn't want to deal with it anymore. I think I made just under a $1000 by doing that. For some people, that amount would be worth "juggling the debt".

 

[janette]

With the low interest rate I wouldn't worry too much about paying them off. I'd put money into a Roth, 401K, emergency savings & get a well established fund for someday (house, car, wedding whatever) get into the habit of putting money into a mid-term savings.

Since you are young any money you put into long term savings will be worth more than the interest you are paying; find a few calculators online that will show how much a Roth will be worth if you put $18,000 in now. Weigh that against the money you'd save on interest on your loan.

Then if there is extra throw it into the debt; eventually the payment just becomes a bother and you'll be glad it's over even if you aren't paying much interest.

 

[Forevryoung]

Thanks guys!

The car- I don't need a newer one yet, it's just something that I'm going to have to spend a large chunk of change on in a few years and I want to start socking money away for it now. I have no problem driving my car another 60,000 miles or more. I just want to avoid a car payment (I've been "spoiled" by never having one )

The move- I've been back at home for 2 years now to save money. I'm not looking to buy anything as I live on Long Island where starter homes are $300,000 ugh. I'm looking to rent. I know it's not ideal financially to move out but I can't stay with mommy and daddy forever and splitting the cost of rent with DBF, who also lives at home, will help. Both of us are of the opinion that we need to live together before marriage.

I think I'm going to increase the payment toward the student loans so that they are paid off faster but not so much as it will be detrimental to any of my other savings (house, car, retirement, emergency fund)

 

[Cindy B]

well my contour the transmission blew to the tune of $4k (which of course I didn't have) so we bought the taurus. The s-10 (brakes) was my parents car and when it died we just stayed at one car (and drove the taurus to death). The taurus got totaled in 07 when I had 5 payments left on it at 105k (was SOO excited) when we got t-boned. Then last summer the ranger had the fuel pump go out (again my parents old car) and since we were going to purchase DH a new vehicle towards the end of the year anyway (completely done with daycare except during summer for the first time), I used the money to fix the thing as a down payment for a car for him.

For us, I think its just bad bad luck and the fact that I put a ton of miles on quickly (my current car will be 3 years old in November and already over 50k, I bought it with 0 miles on it) as I put anywhere from 500-1000 miles a month on just for business driving (not including my commute and any other driving I do). But on the flip side, my mileage check each month pays my car payment.

I have had horrible luck with Ford products. I had a Windstar completely die, and two Mustangs not work out well. However, the Hondas and Mitsubishis we have had were wonderful cars that gave us no problems!

 

[tomthebarncat]

If your payments are low anything extra you send goes right to the principle. I paid off mine in 4 years by sending an extra $400 each month. I borrowed 30,000 and ended up paying back 42,000. I paid them off within 4 years by sending 500 every month! I had no desire to keep paying the bare minimum just because I could. Mine were also low interest but still, it was such a relief to be done with them and a great moment for me personally. I bought and paid for my 3 degrees and no one can take them away!! It is in my will to be buried with my diplomas in one hand and my student loan payoff notice in the other. It is that important to me!

 

[OceanAnnie]

If your payments are low anything extra you send goes right to the principle. I paid off mine in 4 years by sending an extra $400 each month. I borrowed 30,000 and ended up paying back 42,000. I paid them off within 4 years by sending 500 every month! I had no desire to keep paying the bare minimum just because I could. Mine were also low interest but still, it was such a relief to be done with them and a great moment for me personally. I bought and paid for my 3 degrees and no one can take them away!! It is in my will to be buried with my diplomas in one hand and my student loan payoff notice in the other. It is that important to me!

Yes. That is an overlooked detail, quite often. Just think what it would've been if you hadn't paid it off in the 4 years. Compounded interest even when low is still interest. Why stretch it out and pay more? Pay it off while you are young and do not have other responsibilities to juggle. It might be an easy payment now, but that may not always be the case (house, car, kids, calamities).

 

[tinkabella627]

Pay them off... I graduated in 2006 and can't stand paying off my loans. Between my husband and I we pay almost $700 a month and I feel like they are NEVER going to go away. Even if it means putting off moving out, you will be better off to get rid of them. I pay 250 on one loan and 100 on another and I swear the amount hasn't changed much in the almost 3 years I have been paying on them. I can't see how they are supposed to be gone in 10 years. Once yours are paid off you can start throwing your money back into your savings and it will get there fast without having those bills to pay for.

ETA: the fact that the interest is tax deductible isn't all that great. You can only claim $2500 (or $1500 I can't remember) in interest, which my husband and I went way over and you don't get enough back to make it worth stretching out the loans.

 

[katiebelle21]

Pay them off... I graduated in 2006 and can't stand paying off my loans. Between my husband and I we pay almost $700 a month and I feel like they are NEVER going to go away. Even if it means putting off moving out, you will be better off to get rid of them. I pay 250 on one loan and 100 on another and I swear the amount hasn't changed much in the almost 3 years I have been paying on them. I can't see how they are supposed to be gone in 10 years. Once yours are paid off you can start throwing your money back into your savings and it will get there fast without having those bills to pay for.

ETA: the fact that the interest is tax deductible isn't all that great. You can only claim $2500 (or $1500 I can't remember) in interest, which my husband and I went way over and you don't get enough back to make it worth stretching out the loans.

I agree completely with this post! I wish that I had paid my student loans off right after college (pre-mortgage and car payments) instead of stretching it out. It is so discouraging to pay every month and only see the principle go down by a little bit. My husband and I have started to aggressively pay down our loans (starting with his) and it's nice to watch them disappear one by one!

 

[DansBride2009]

That is true about having a low interest loan, taking longer to pay it off ... I guess I'd personally rather put as much as I could towards the loan because it's still debt, no matter how high or low the interest is.

I hope cars can last longer than 125,000 !!! Fingers crossed ... I have 19,000 on my car right now. I want to drive it until the wheels fall off. My father in law has about 150,000 (why do I always put $$ before car mileage when I type it? GRRRRR ...) miles on his car and he hasn't had to really have repairs on his. He drives it cross country to California a lot.

Do you all think it depends on the make and model? I have a Nissan Sentra. I wanted a Honda and don't remember why I went with Nissan, it was 5 years ago when I 'bought' my car. I think my father in law's car is a Chevy truck.

forevryoung (sorry if I got that wrong) I totally get feeling spoiled by having a new car. That's how I felt when my Nissan was brand spanking new!! You know, they have New Car Smell or something like that they can put in it to make it seem new. What helps me is to occasionally go get it professionally detailed if I have money, or just do it myself. It feels so new !! Maybe I'll go detail it now ... it sure needs it.

Good luck, money is so hard to manage sometimes. It's not easy to make a small amount of money go everywhere !! Making ends meet sometimes is tough in itself ... keep us updated !

 

[Sagginit]

im in the same loan boat. my first two years out of college my job did not pay that well, it barely coverd my bills with those huge loans. i have spent the last year and few months at my new job socking away enough to be an almost one year ER fund/car fund since i too have an older car and it will eventually die.

now i was thinking about putting more towards loans but i now qualify for the 401K at work. since that is long term worth more i am going to put in what they match and then re-evaluate. the way i look at it is with the current economy i would rather have the piece of mind of having a nice savings account should anything happen. for example if anything happens to my parents and i need to move out i need to be able to pay for that or replace my car etc. if you can afford to put more towards them without risking other financial security i would do it, if you really would need the money should an ER arise you might be better to just keep saving it and then if you dont need it or get a better job put that lump sum towards the loans.

i dont know about you but as i pay off more they keep lowering my payments and ironically there are several ways to apply to have your loans lowered but the only way to increase my monthly payment is to call and negotiate. forget CC companies, can the govt reform student loans?

one good thing is i am learning great ways to save money and live on a budget from the kind people on this board. good luck, just dont let the stress of the loans get to you, president obama was still paying off student loans until he published his second book so you are often in good company