Debt Freedom

FrankieG · January 2014

How big of an emergency fund do you all have? Trying to balance between retirement fund, student debt, and emergency fund savings..

SVRDhand13 · January 2014

ldent42 said:
That said, since so many of you guys have dealt with student loans, could someone please tell me if you get a student loan, could you pay the whole thing back at once in your first payment? Or do they MAKE you pay back little by little so that they can get the interest money from you?

You could pay it off right away. But if you are able to, why even take out loans to begin with?

I am done with 2 years of 10 years of law school loans.

My final payment will be the best feeling ever

.

Congrats to the OP for being school debt free!

kw18 · January 2014

FrankieG said:
How big of an emergency fund do you all have? Trying to balance between retirement fund, student debt, and emergency fund savings..

My ultimate emergency fund goal is six-months salary. Due to my recent wedding and the upcoming Europe trip, the fund is only about 1-month. But I'm not too worried as I have a two stable jobs; by the end of the year I'll have six months saved up.

There are a couple different ways to approach debt. I generally attacked the highest interest first, throwing everything at it. If you have retirement through work, that makes it easy because it's not money you'll ever have your hands on, so you won't really miss it. If not, set up some sort of auto-withdrawal and budget around that.

I wasn't too concerned about my emergency fund, and I don't think most people with a lot of debt should be if they have a stable job. My advice is that if you definitely want some sort of saving fund but have a lot of debt, have a small and manageable amount from every paycheck automatically go into savings. Like $10. Another way to think about it is sacrificing a couple drinks at a bar every two weeks. It's such a small amount you don't really notice it, but after a year you'll have a couple hundred saved up. If you keep that up, while your paying off your debt, you'll be in a good spot.

PJ_Soul · January 2014

Congrats!!! That's a real achievement. :-bd
I am still paying off my student loans, after many years. Should be done in another couple years. I can't wait for the day!

kw18 · January 2014

SVRDhand13 said:

ldent42 said:
That said, since so many of you guys have dealt with student loans, could someone please tell me if you get a student loan, could you pay the whole thing back at once in your first payment? Or do they MAKE you pay back little by little so that they can get the interest money from you?
You could pay it off right away. But if you are able to, why even take out loans to begin with?

I am done with 2 years of 10 years of law school loans.

My final payment will be the best feeling ever .

Congrats to the OP for being school debt free!

Thanks! And congrats to you ... law school, Wow! Good luck with your payments -- you're 1/5th of the way there!

And I agree ... there's no reason to take out a loan if you don't need it. But if you need it while going through school and can pay it back with one payment after school (that's some first job!) you absolutely can do it.

The big thing everyone should watch out are the "scams" some financial institutions offer for low monthly payments. Yeah, you'll have a super low monthly payment, but the interest will kill you and you'll wind up paying the loan back three-times over throughout the course of 30 years. $:\$

kw18 · January 2014

PJ_Soul said:
Congrats!!! That's a real achievement. :-bd
I am still paying off my student loans, after many years. Should be done in another couple years. I can't wait for the day!

Good luck! It's a great feeling when all is said an done, for sure.

hedonist · January 2014

kw18 said:
I have 2/3 of my auto loan paid off ... in another four months -- just before we leave for Europe -- it'll be totally paid. Total pay-off time on the 5-year loan = 2 years, 7 months. I'm fairly excited as that will mean, with the exception of the mortgage, my wife and I will be totally debt free!

Bravo! ...and behold the glory of patience, sacrifice and determination - virtues which carry over into so many other non-monetary aspects of life.

FrankieG · January 2014

kw18 said:

FrankieG said:
How big of an emergency fund do you all have? Trying to balance between retirement fund, student debt, and emergency fund savings..
My ultimate emergency fund goal is six-months salary. Due to my recent wedding and the upcoming Europe trip, the fund is only about 1-month. But I'm not too worried as I have a two stable jobs; by the end of the year I'll have six months saved up.

There are a couple different ways to approach debt. I generally attacked the highest interest first, throwing everything at it. If you have retirement through work, that makes it easy because it's not money you'll ever have your hands on, so you won't really miss it. If not, set up some sort of auto-withdrawal and budget around that.

I wasn't too concerned about my emergency fund, and I don't think most people with a lot of debt should be if they have a stable job. My advice is that if you definitely want some sort of saving fund but have a lot of debt, have a small and manageable amount from every paycheck automatically go into savings. Like $10. Another way to think about it is sacrificing a couple drinks at a bar every two weeks. It's such a small amount you don't really notice it, but after a year you'll have a couple hundred saved up. If you keep that up, while your paying off your debt, you'll be in a good spot.

dam 6 months?! Right now I have like 1/4 of a month

) Yeah retirement is through work and earning more that the interest on my debt, so I'm coming out ahead by contributing more to retirement than paying off my debt. (We'll see how long that lasts..)

I am mainly concerned about my emergency fund becuase I know I'm gonna need to find a cheaper apartment in the summer, plus I'm gonna need car repairs soon, and a new car probably 2 years out. Plus this the possibility of another Pearl Jam tour (always got to figure that in

) )

kw18 · January 2014

FrankieG said:

kw18 said:

FrankieG said:
How big of an emergency fund do you all have? Trying to balance between retirement fund, student debt, and emergency fund savings..
My ultimate emergency fund goal is six-months salary. Due to my recent wedding and the upcoming Europe trip, the fund is only about 1-month. But I'm not too worried as I have a two stable jobs; by the end of the year I'll have six months saved up.

There are a couple different ways to approach debt. I generally attacked the highest interest first, throwing everything at it. If you have retirement through work, that makes it easy because it's not money you'll ever have your hands on, so you won't really miss it. If not, set up some sort of auto-withdrawal and budget around that.

I wasn't too concerned about my emergency fund, and I don't think most people with a lot of debt should be if they have a stable job. My advice is that if you definitely want some sort of saving fund but have a lot of debt, have a small and manageable amount from every paycheck automatically go into savings. Like $10. Another way to think about it is sacrificing a couple drinks at a bar every two weeks. It's such a small amount you don't really notice it, but after a year you'll have a couple hundred saved up. If you keep that up, while your paying off your debt, you'll be in a good spot.
dam 6 months?! Right now I have like 1/4 of a month ) Yeah retirement is through work and earning more that the interest on my debt, so I'm coming out ahead by contributing more to retirement than paying off my debt. (We'll see how long that lasts..)

I am mainly concerned about my emergency fund becuase I know I'm gonna need to find a cheaper apartment in the summer, plus I'm gonna need car repairs soon, and a new car probably 2 years out. Plus this the possibility of another Pearl Jam tour (always got to figure that in ) )

Six months is for sure on the extreme side of things, I know! Most places I've looked at suggested three-months salary ... it can be hard, though! I had a lot of expenses that kept digging into my savings, and that sucks. Sounds like your on the right track though.

Downsizing to cut expenses is a really good idea. I got rid of my cable TV, which I didn't really miss after it was gone. Cook more, eat out less, and buy in bulk ... those are good tips, too, to free up money to pay down the debt faster, and/or give you a bit extra cash on hand for emergencies.

Good luck, and keep at it!

kw18 · January 2014

hedonist said:

kw18 said:
I have 2/3 of my auto loan paid off ... in another four months -- just before we leave for Europe -- it'll be totally paid. Total pay-off time on the 5-year loan = 2 years, 7 months. I'm fairly excited as that will mean, with the exception of the mortgage, my wife and I will be totally debt free!
Bravo! ...and behold the glory of patience, sacrifice and determination - virtues which carry over into so many other non-monetary aspects of life.

Indeed.

And thanks!

evsgjamm · January 2014

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evsgjamm · January 2014

ldent42 said:
MayDay10" said:
That said, since so many of you guys have dealt with student loans, could someone please tell me if you get a student loan, could you pay the whole thing back at once in your first payment? Or do they MAKE you pay back little by little so that they can get the interest money from you?
In Canada, with the Canada National Student Loan Service, you can pay it all off whenever you like, without penalty.

JonnyPistachio · January 2014

Kw, congrats on getting your stuff in order!
I know student loans can really bog one down. I have many friends who had difficulty with student loans.

Personally, I was able to really get ahead when I stopped buying new cars. I paid cash for autos that had 30-40k miles. If you really think about the money we spend on transportation and the rate of depreciation of a brand new car, its kinda absurd. I have a nice home and a piece of shit clunker in my driveway. All my neighbors have audis, bmws, mercedes and scoff at my banged up old toyota matrix. But its paid off and has been for 8+ years. I guess thats just personal preference though

kw18 · January 2014

JonnyPistachio said:
Kw, congrats on getting your stuff in order!
I know student loans can really bog one down. I have many friends who had difficulty with student loans.

Personally, I was able to really get ahead when I stopped buying new cars. I paid cash for autos that had 30-40k miles. If you really think about the money we spend on transportation and the rate of depreciation of a brand new car, its kinda absurd. I have a nice home and a piece of shit clunker in my driveway. All my neighbors have audis, bmws, mercedes and scoff at my banged up old toyota matrix. But its paid off and has been for 8+ years. I guess thats just personal preference though

Thanks!

I've always heard that about cars, and I agree. My last car I bought new, but it was the only car I've ever bought new and I just wanted a new one.

It's a Ford Fiesta, so it wasn't too much anyway. I have no need for fancy cars, and my next car will probably be another small little thing with decent gas mileage, maybe used, depending on the deal. But that is going to be at least another four to five years down the line.

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