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Message
What to do with new money
Posted on 5/9/18 at 3:53 pm
Posted on 5/9/18 at 3:53 pm
So I'm about to graduate, and I'll be taking with me about 20k in student debt. My first check will give me ~12-15k to play with after all initial purchases necessary.
Question is -- how much of that should I use to pay down student debt? My goal is obviously to be debt free ASAP, but I don't want to be irresponsible and leave myself with none of that invested/in savings. Any advice for a young buck?
Question is -- how much of that should I use to pay down student debt? My goal is obviously to be debt free ASAP, but I don't want to be irresponsible and leave myself with none of that invested/in savings. Any advice for a young buck?
16
Posted on 5/9/18 at 4:05 pm to NewBootGoofin
quote:
My first check will give me ~12-15k to play with after all initial purchases necessary.
Uhhhhh I'm assuming this is a signing bonus + first regular check
I'd keep maybe 5k to start an emergency fund and the rest depends on how much your interest rate is on the debt.
Posted on 5/9/18 at 4:05 pm to NewBootGoofin
Your very first paycheck, with only 20K in student loan debt, is going to leave you with $12,000-15,000 after initial expenses?
Posted on 5/9/18 at 4:11 pm to NewBootGoofin
Whats the interest rate on the debt? The higher the interest rate, the bigger priority paying it off should be. If it were me, I'd keep enough cash on hand to cover all your bills and day-to-day expenses for about 2-3 months and use the rest to pay off the student loan ASAP.
If your job offers employer match on 401k contributions, then take advantage of that...preferably to whatever max employer match is if you can afford it while still being able to put a dent in the student loan debt.
If your job offers employer match on 401k contributions, then take advantage of that...preferably to whatever max employer match is if you can afford it while still being able to put a dent in the student loan debt.
Posted on 5/9/18 at 4:30 pm to NewBootGoofin
I sell this if your interested.
Posted on 5/9/18 at 4:46 pm to AUjim
Lol yeah that's definitely not just salary. That's what I'll have left after buying furniture and things like that after salary + signing bonus.
Interest rate is 4.3%. And that's the whole trouble is that I know I need to have 2-3 months in savings but the idea of paying interest just irks me
Interest rate is 4.3%. And that's the whole trouble is that I know I need to have 2-3 months in savings but the idea of paying interest just irks me
Posted on 5/9/18 at 5:14 pm to NewBootGoofin
6-8k in savongs
3k on loans
1.5k to buy yourself something nice/take a vacation.
You're early 20s. If you have a good job you'll be able to pay off the loans easily and quickly. 20k is really nothing and you get 6 months of no interest grace period anyway. $300 of interest isn't going to kill you and you're only fresh out of college starting your career once. Don't sweat this kind of stuff. That's not to say don't work as hard as you can to get your loans paid off, but don't sacrifice too much.
3k on loans
1.5k to buy yourself something nice/take a vacation.
You're early 20s. If you have a good job you'll be able to pay off the loans easily and quickly. 20k is really nothing and you get 6 months of no interest grace period anyway. $300 of interest isn't going to kill you and you're only fresh out of college starting your career once. Don't sweat this kind of stuff. That's not to say don't work as hard as you can to get your loans paid off, but don't sacrifice too much.
This post was edited on 5/9/18 at 6:24 pm
Posted on 5/9/18 at 5:53 pm to Mingo Was His NameO
Invest every penny, reinvest any earnings. Compound interest. That 15k will easily be 150-300k in 30-35 years without a penny added to it, if invested wisely.
Posted on 5/9/18 at 5:58 pm to NewBootGoofin
Keep the cash, max out your 401k, and pay down the student loan agressively.
Posted on 5/9/18 at 6:16 pm to NewBootGoofin
quote:
how much of that should I use to pay down student debt?
Everything but $1000.00.
quote:
My goal is obviously to be debt free ASAP, but I don't want to be irresponsible and leave myself with none of that invested/in savings.
Pay the debt first. Then start your savings account and have 3 to 6 months saved up in cash (in a savings account) before you start investing.
Posted on 5/9/18 at 6:21 pm to NewBootGoofin
quote:
I know I need to have 2-3 months in savings but the idea of paying interest just irks me
You don't need this.. it's just nice to have.
If I'm being safe, I'm throwing all but $5k at the student loans.
If I'm being risky, I'm throwing it all at the student loans and opening up an interest free credit card (15-18 months) to use if needed as I live paycheck to paycheck building savings back up.
If I'm being smart, I'm doing like another poster suggested and instead of paying down student loans, I'm throwing extra cash at my 401k to max it out (if not already doing so). You're 401k is beating 4.3% longterm.
Posted on 5/9/18 at 6:25 pm to PhiTiger1764
Yeah I’ve never understood why people want 10s of thousands of dollars sitting in an account earning nothing. You gonna have some need pop up for 10k that you can’t wait a little bit to pay?
Posted on 5/9/18 at 6:27 pm to Dawgfanman
quote:
Yeah I’ve never understood why people want 10s of thousands of dollars sitting in an account earning nothing. You gonna have some need pop up for 10k that you can’t wait a little bit to pay?
If you're 10k turns into 8k over ought and you need it in 6 months then yes. I generally agree with you, but that's a pretty ballsy position to take.
Posted on 5/9/18 at 6:31 pm to Mingo Was His NameO
quote:
If you're 10k turns into 8k over ought and you need it in 6 months then yes. I generally agree with you, but that's a pretty ballsy position to take.
So as a short term move it makes sense I guess. But once you have say 12 months salary in non retirement investment accounts, then what’s the difference?
Posted on 5/9/18 at 6:33 pm to Dawgfanman
quote:
But once you have say 12 months salary in non retirement investment accounts, then what’s the difference?
I agree with you here. As a new college grad I'm assuming that's not the case.
Posted on 5/9/18 at 7:06 pm to NewBootGoofin
Truly not enough information to give an opinion. There are so many factors that play into what you should do.
Posted on 5/9/18 at 7:14 pm to NewBootGoofin
I don’t agree with Dave Ramsey on everything, but paying down $14k of a $20k student debt, with 1 k left over for emergency fund sounds like the right plan. If you’re renting and starting a new job, I think it’s safe to assume that housing costs and job/income are safe and stable for at least the next 6-12 months, unless you blow up a chemical plant or commit medical malpractice (or the equivalent frick up in your field).
If it was 100k in student loans, I probably wouldn’t take the Dave Ramsey approach, and would add more to emergency fund, but your already close to being debt free, so knock it out.
If it was 100k in student loans, I probably wouldn’t take the Dave Ramsey approach, and would add more to emergency fund, but your already close to being debt free, so knock it out.
Posted on 5/9/18 at 8:56 pm to Ric Flair
quote:
I don’t agree with Dave Ramsey on everything, but paying down $14k of a $20k student debt, with 1 k left over for emergency fund sounds like the right plan.
I agree. Think of it this way. You were a broke college student just a few weeks ago. Just throw 14k at the debt and you are still in the same situation you were in last month BUT your student debt has been reduced by almost 75%.
Posted on 5/10/18 at 8:40 am to Mingo Was His NameO
quote:
6-8k in savongs
3k on loans
1.5k to buy yourself something nice/take a vacation.
I'd say something like this. Treat yourself. That signing bonus is a gift while you are young. Spend part of it on something fun
Posted on 5/10/18 at 8:52 am to NewBootGoofin
I would put 60% in a 401K/roth IRA and 40% towards debt. I wouldn't worry about an emergency fund yet, I have to believe your risk/exposure is extremely low at this point in your life and if worse comes to worst you could live with a buddy/mommy.
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