Hey Reddit,
I’ve been lurking on this subreddit over the past few months to get a better idea of how to balance of how to build out my budget for the next couple of years to finally tackle my student loans. I’m currently 25 YO Male living in a midwestern city. I currently have about 30k of student loans at variable interest rates, two being above 5% which at 4,300 at 6.8% and 2,000 at 5%. My father also has about $80k in loans under his name only that I’d like to assist with paying down the minimums once I’m finished with my current loans. My grace period for repayment ends in April so interest has started to increase on all my loans. Also my MBA was fully paid my employer so these student loans are solely from my undergrad.
I’ve been employed for about two and half years full time but due to a few unforeseen medical expenses and international travel I really didn’t pay down much of the interest while I was in grad school. Since January 2019, I’ve shifted my focus to aggressively pay down my student loans so I can be done with them in the next two years.
Here is my current budget:
I currently have about $4500 in savings from about $1500 in stocks that tripled in value over the three years, $1250 in a HYS at 2.2%, and the remainder in my standard checking account. My take home is about $2300 a month. Since my fulltime employment, my employer contributes at 8.5% and I’ve contributed 8.5% with about 20K in my 401k.
Due to my recent promotion, I’m currently contributing 11.5% which seems a bit high and I’m debating reducing it to my minimum 5% and using the extra income to pay down my loans. I pay my credit card debt in full every month and those expenses are included in my budget.
Monthly Budget:
$500 – Rent
$60 – Synchrony Phone Credit ($602 interest free till 11/20, minimum is $35)
$50 – Gas (Walk to work so this could be less)
$200 – Groceries
$75 – Restaurant/Coffee/Bars
$35 – Electricity (Usually about $20-$30 in the non-summer months)
$1000 – Student Loans
$350 - Savings
Yearly Expenses:
$750 - Car Insurance ($350ish payments in January and September)
$500 – Travel
$250 - AMEX Renewal
Questions:
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Should I spend more of my savings to paydown my loans as soon as possible?
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To get it off my chest, should I do a lump payment on the phone payment and use all future payments towards my student loans?
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Should I bring down my contribution for my retirement? My minimum contribution would need to be 5% which is about $115 more I could use towards my loans on a monthly basis.
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I’d like to build up an emergency fund to $6K but should that be a goal for later until my student loans are out of the way?
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Since AMEX increased their yearly renewal fee would my credit score take a huge hit if I canceled the account in 2020? This account has been open since summer 2016. I've reaped the benefits but the cost/reward is almost $0 now. My average credit age is 4.5 years.
Any advice would be greatly appreciated.
Submitted February 16, 2019 at 11:09AM by pkkprotector http://bit.ly/2DHQIma
