Save or pay more on student loans?

posted 3 years ago in Money
  • poll: If you have student debt, where do you put extra money?
    On loans : (52 votes)
    56 %
    In savings. : (41 votes)
    44 %
  • Post # 3
    12884 posts
    Honey Beekeeper
    • Wedding: June 2011

    Depends on the interest.  I didn’t have loans, but my husband did.  He paid off the higher interest ones, 6-7% ASAP.  Then the 2ish% ones we just paid the minimum on, until it got to about 2k, and got tired of seeing it and just paid it off.

    Post # 4
    1036 posts
    Bumble bee
    • Wedding: August 2013

    @Mint2Bee: That is exactly what i am trying to figure out myself. I don’t know whats best. On one hand, saving is great and needed if we want to buy a house sooner, etc. On the other hand 80k in student loans sucks to have hanging over your head

    Post # 5
    9859 posts
    Buzzing Beekeeper
    • Wedding: May 2014

    @Mint2Bee:  We have an emergency fund and a car repair fund (I get paid mileage at work and those cheques are the car fund).  FH has a payroll deduction of 5% that’s matched by his employer that goes directly to a pension fund – other than that all our extra money goes to paying of our debt – FH 50k Student Loans, me 15K plus about another 15k in various credit (combined 15 years of post secondary education gets expensive, especially with a cross country move…) we’re putting a pretty good dent in it.

    Post # 6
    720 posts
    Busy bee
    • Wedding: May 2015

    Pay off the loans!! Student loan interest is crazy..FI and I plan to pay his off as quickly as we can when he graduates law school.

    Post # 7
    11772 posts
    Sugar Beekeeper
    • Wedding: May 2013

    I built a small savings (enough for a couple of months), then paid off my loans faster!

    Post # 8
    3249 posts
    Sugar bee
    • Wedding: August 2013

    Whichever has higher interest.  If you invest the savings in something that pays more than the interest that is accruing on the student loans, you win.  Just do the math and figure out which actually costs you the least in the long run.

    Post # 9
    903 posts
    Busy bee
    • Wedding: September 2015

    Both!  By which I mean, figure out what you want the minimum balance of your savings account to be (make it reasonable).  I’ve got some serious debt to get rid of, so I decided that I’d keep a minimum of $1000 in my savings account in case of emergency, and any additional income goes to debt payment.  If an emergency comes up and I have to make a withdrawal from my savings account, I go back to making minimum payments on my debt until my savings is back at $1000.  

    The interest rates on debt virtually always cost you more than you make in interest on your savings, so I figure it’s smarter to erase debt as quickly as possible.

    Post # 10
    2474 posts
    Buzzing bee
    • Wedding: September 2012

    Savings. I will be paying off my loans forever, and I’ve come to terms with that. I’d rather have money in my savings if something happened instead of having put it into loans, and then need it later.

    Post # 11
    1093 posts
    Bumble bee
    • Wedding: May 2014

    @Mint2Bee:  Savings. I would sign up for automatic loan payments to save a little bit of interest.

    Post # 12
    2878 posts
    Sugar bee
    • Wedding: August 2013

    We paid off his loans with the 6.8% interest rate rather than putting that money in savings, but are putting less effort into paying off the 3.4% interest rate ones, since our investments make a higher percentage than that.

    Post # 13
    6812 posts
    Busy Beekeeper
    • Wedding: June 2014

    Well, I’m paying as weeeeee bit as possible because I’m on the 10-year public service loan forgiveness plan and hoping that they get forgiven in 10 years, so I don’t know how much this helps you unless you are going to work in public interest.

    Post # 14
    10384 posts
    Sugar Beekeeper
    • Wedding: September 2010

    Depends on the interest rate and how much you already have in immediate savings. If you can make more through investing in a typical mutual fund, etc, i’d go that route.

    Don’t forget that student loan interest is tax deductible, so that can make other investments more profitable in comparison.

    Post # 15
    457 posts
    Helper bee
    • Wedding: April 2014

    I put like an extra $40 to my student loan on top of the minimum payment. But in general I’ve been just putting most in savings. Because I want to build an emergency fund first (at least $5,000). After I build my emergency fund, then I’ll probably just shove money into my loans.

    Post # 16
    6450 posts
    Bee Keeper
    • Wedding: June 2013

    @BrandNewBride:  This is exactly what we did!

    We built up our emergency fund and then started putting more towards loans.  

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