Post # 1
im just curious, for those of you who have student loans, when you have extra money do you put it in savings or put extra payments on your loans?? I see the benefit of both and was just curious as to what the majority of people prioritize.
Post # 3
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
@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
@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
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
I built a small savings (enough for a couple of months), then paid off my loans faster!
Post # 8
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
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
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
@Mint2Bee: Savings. I would sign up for automatic loan payments to save a little bit of interest.
Post # 12
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
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
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
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
@BrandNewBride: This is exactly what we did!
We built up our emergency fund and then started putting more towards loans.