So, I am a senior CS major in college and I'll be graduating next year with around 30 to 35k in student loan debt. I just got a internship that should last me all the way until graduation in May 2018. I'll get about 1000 per month from it. I also have a 403b from my past job with around 700 in it (it was a dumb idea to have even opened it. I thought I would have stayed in the company long enough to keep their 4% match and had more in it, but it is what it is). I live at home with parents and my only expenses are my car (around 170 per month for gas and insurance total), so that leaves me with quite a bit of money to go into savings.
Currently I have about $1000 in the bank and $1000 worth of electronic government bonds that I have put aside as my sort of emergency fund.
Anyway I am wondering what to do with the excess cash I get from my new job. Questions similar to mine on this subreddit seem to unanimously suggest paying off debt before putting any money into any sort of investments, but I am a bit weary of doing that because I wonder if that is really best in the long run. I could be missing out on earning money from interest by waiting to start investing. I haven't seen a post that really convinced me it would be more ideal to not invest a little bit. I'm not looking to do a lot, but maybe open an IRA account.
After expenses I'll have about $800 dollars per month. So, I wanted to start up a Roth IRA after summer ends (having earned about $3000 already) and then using $1000 from these savings, as well as rolling over my 403b to create the IRA. My rough plan thereafter would be:
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Put in about 300 per month to the Roth IRA.
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Pay off about 100 dollars from student loans per month (enough to cover any interest plus a little principal)
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Put the other $400 into savings for a better car/better emergency fund for after graduation
Then, once I graduate I will pay off the debt aggressively, but while also putting the max into the roth IRA, assuming I get a half-way decent paying job, which with my degree hopefully wouldn't be too hard. But you never know. Saying I get a conservative-for-CS 40k salary after college it wouldn't be hard paying off my loans within a couple years doing this, especially if I spend one more year at home with similar expenses.
Failing to find a decent paying job, my backup plan would be putting aside the Roth IRA plan to worry solely on the loans-- but leaving what I have in it to grow, so that I at least have something building up for the future. Absolute worst case scenario, I can pull from my principal in my IRA to help pay the student loan if I somehow can't meet the payments. I think I'd have had to completely screwed up and have gotten kicked out of my house for that to happen though. Even a minimum wage job would be able to meet my payments, even after factoring in a small rent to keep my parents happy until I find a job with a more livable wage.
So do you think this is a good plan? Should I adjust my monthly plan? Or is it truly better to focus only on debt? If so, can you explain to me why the interest from the Roth would not be beneficial in the end? Also in the no-IRA scenario what should I do with my 403b?
I hope I didn't come off as too ignorant in my post- I am just trying to think things through right now!
Submitted July 23, 2017 at 12:45AM by ayapf http://ift.tt/2unR5gN
