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Message
A few questions from a 26 y/o with little to no financial knowledge.
Posted on 10/1/20 at 10:08 am
Posted on 10/1/20 at 10:08 am
So I've been going over financials and such the last few weeks and trying to make some decisions as to the best course of action to get myself ahead these next few years. Granted I don't have much financial knowledge I thought I'd come here with a few questions.
1) I have about 35k in federal student loans and about another 4k in private loans. The federal is spread out over 9 separate loans and I'm not 100% sure on the rates for these cats (having trouble finding that info on the federal site). The privates are spread over 2 separate loans (both with Wells Fargo). My question is would I be better of financially consolidating the government loans into 1 and the private loans into 1. I am a teacher (lol I know but I enjoy it) in a low income district so I am up to get 17.5k of the federal covered after year 5 (about 2.5 years from now). 1 of the privates is 7.55% I believe and the other is 7.9% (about $100-$200 difference in principal).
2. I live on my own and am currently paying $675/month in rent. Houses in my market are fairly cheap (could get a smaller 2 bed house for around $95 k) and I'm contemplating making the move to purchase one with rates being so low. From what I calculated I could buy and theoretically (depending on lender) be paying less in housing costs (mortgage insurance taxes all that good jazz) then I'm currently paying in rent. First off on paper does it seem like my math would be right there? My credit score will be crossing into the 700's in the next month (not great overall I know but I'm pretty proud of it from the hole I put myself in coming out of college (I was an idiot with credit cards)). Would this be a smart play for me? My thinking is it's better to be putting money into something that's at least mine and I can use to get something nicer later in life when I'm ready for it.
3. Would either of these moves have a huge negative effect on my credit rating and if so should I be overly concerned about it? Like I said I'm pretty proud of the work I put in to get it up to where it is and don't want it to take too big of a hit if I can avoid it.
Thank you in advance to anyone that gives any serious responses. I know it's a lot I'm just looking for some outside opinions before I make any decisions one way or the other.
1) I have about 35k in federal student loans and about another 4k in private loans. The federal is spread out over 9 separate loans and I'm not 100% sure on the rates for these cats (having trouble finding that info on the federal site). The privates are spread over 2 separate loans (both with Wells Fargo). My question is would I be better of financially consolidating the government loans into 1 and the private loans into 1. I am a teacher (lol I know but I enjoy it) in a low income district so I am up to get 17.5k of the federal covered after year 5 (about 2.5 years from now). 1 of the privates is 7.55% I believe and the other is 7.9% (about $100-$200 difference in principal).
2. I live on my own and am currently paying $675/month in rent. Houses in my market are fairly cheap (could get a smaller 2 bed house for around $95 k) and I'm contemplating making the move to purchase one with rates being so low. From what I calculated I could buy and theoretically (depending on lender) be paying less in housing costs (mortgage insurance taxes all that good jazz) then I'm currently paying in rent. First off on paper does it seem like my math would be right there? My credit score will be crossing into the 700's in the next month (not great overall I know but I'm pretty proud of it from the hole I put myself in coming out of college (I was an idiot with credit cards)). Would this be a smart play for me? My thinking is it's better to be putting money into something that's at least mine and I can use to get something nicer later in life when I'm ready for it.
3. Would either of these moves have a huge negative effect on my credit rating and if so should I be overly concerned about it? Like I said I'm pretty proud of the work I put in to get it up to where it is and don't want it to take too big of a hit if I can avoid it.
Thank you in advance to anyone that gives any serious responses. I know it's a lot I'm just looking for some outside opinions before I make any decisions one way or the other.
This post was edited on 10/1/20 at 12:33 pm
5
Posted on 10/1/20 at 10:11 am to Pedro
Also consider maintenance and any upgrade costs on a house.
Posted on 10/1/20 at 10:13 am to jimbeam
Yea I was talking with a coworker and he was reminding me of this as well. I'd be sure to do research on any house I was considering to make sure I was minimizing that.
Posted on 10/1/20 at 10:28 am to Pedro
Do you plan on staying in your town for the next ten years or so? Also look at an amortization schedule to learn how front-loaded mortgages are with interest. If nothing else just to learn and so you’re not pissed a few years from now 
Posted on 10/1/20 at 10:34 am to Pedro
I would look at refi for the private loans through sofi. That rate seems high.
As for your government loans, if you refinance how does the $17.5k work? I would be leery of losing the $17.5k if you refinanced.
Item #3 - no. might go down a bit due to them pulling credit scores but that is it. nothing significant.
As for your government loans, if you refinance how does the $17.5k work? I would be leery of losing the $17.5k if you refinanced.
Item #3 - no. might go down a bit due to them pulling credit scores but that is it. nothing significant.
Posted on 10/1/20 at 10:52 am to notsince98
Looked at sofi and it did offer me a lower rate. But I had a brain fart moment apparently I only have 4.4K in private not 7k. So sadly refinancing through them wouldnt be an option as they have a 5k minimum. As far as the federal goes I would be refinancing through nelnet (federal lender) so I imagine I would be fine on that front.
Posted on 10/1/20 at 10:52 am to boosiebadazz
quote:yea I have no intentions of leaving here any time soon. too many things/opportunities going for me here
Do you plan on staying in your town for the next ten years or so?
Posted on 10/1/20 at 11:19 am to Pedro
Kudos to you for digging yourself out of a financial hole, and double kudos for being a teacher. It's such an underappreciated profession.
--first, make sure you understand your pension/retirement benefits offered by your job. Is it a defined benefit plan or a defined contribution plan? Does the district allow you to make additional contributions? Go learn what you need to know so you can think about retirement planning as another piece of this puzzle.
--Do you like having roommates? Are roommates easy to find in your area? BC the relatively low housing costs to purchase could be offset by renting your spare room to a roommate.
--DO NOT buy a house until you have a healthy cash reserve. Every house is inevitably more expensive than you think it will be. Roofs leak, plumbing gets clogged, driveways crack: every first time homeowner always underestimates the carrying costs of a house. Be prepared up front by having cash (that is NOT dedicated to a downpayment) in a reserve fund.
--Set up a payment plan (on paper, in your mind) to pay off those private loans ASAP. They're a millstone around your neck, are not eligible for loan forgiveness, and those interest rates are not great.
Also, BOLO for ways to advance in your career--now is the time to see if your district offers tuition assistance for an advanced degree or national certification. Even if they're only paying 1/2 tuition costs, it's way easier to knock out the MEd or MA before you're married w/kids. In many places, that degree is an automatic boost in your income....
--first, make sure you understand your pension/retirement benefits offered by your job. Is it a defined benefit plan or a defined contribution plan? Does the district allow you to make additional contributions? Go learn what you need to know so you can think about retirement planning as another piece of this puzzle.
--Do you like having roommates? Are roommates easy to find in your area? BC the relatively low housing costs to purchase could be offset by renting your spare room to a roommate.
--DO NOT buy a house until you have a healthy cash reserve. Every house is inevitably more expensive than you think it will be. Roofs leak, plumbing gets clogged, driveways crack: every first time homeowner always underestimates the carrying costs of a house. Be prepared up front by having cash (that is NOT dedicated to a downpayment) in a reserve fund.
--Set up a payment plan (on paper, in your mind) to pay off those private loans ASAP. They're a millstone around your neck, are not eligible for loan forgiveness, and those interest rates are not great.
Also, BOLO for ways to advance in your career--now is the time to see if your district offers tuition assistance for an advanced degree or national certification. Even if they're only paying 1/2 tuition costs, it's way easier to knock out the MEd or MA before you're married w/kids. In many places, that degree is an automatic boost in your income....
Posted on 10/1/20 at 11:41 am to hungryone
quote:yea im looking to start a MA after my 5 years. I'm in a pretty good relationship currently but marriage is likely still a good ways off > 2 years if it keeps going the way it is.
Also, BOLO for ways to advance in your career--now is the time to see if your district offers tuition assistance for an advanced degree or national certification. Even if they're only paying 1/2 tuition costs, it's way easier to knock out the MEd or MA before you're married w/kids. In many places, that degree is an automatic boost in your income....
quote:major no. just getting out from that realm and enjoying it too much to go back.
--Do you like having roommates? Are roommates easy to find in your area? BC the relatively low housing costs to purchase could be offset by renting your spare room to a roommate.
quote:yea im trying to knock those out as quickly as possible which got me considering the refi option. If I can rework at a lower rate and get it knocked off in the next couple years I'll be happy. Im not sure what my odds are of getting that since it's less than 5k.
--Set up a payment plan (on paper, in your mind) to pay off those private loans ASAP. They're a millstone around your neck, are not eligible for loan forgiveness, and those interest rates are not great.
quote:yea that's something I've been working on but i really don't think is quite there yet. So Im guessing I should probably hold out on that front.
--DO NOT buy a house until you have a healthy cash reserve. Every house is inevitably more expensive than you think it will be. Roofs leak, plumbing gets clogged, driveways crack: every first time homeowner always underestimates the carrying costs of a house. Be prepared up front by having cash (that is NOT dedicated to a downpayment) in a reserve fund.
quote:Kansas provides KPERS which is nice but I'm also contributing about 100/month to a separate fund as well. Figured that was a good starting point to get me going while I'm trying to get other things figured out and then I can add more later when I have more available.
--first, make sure you understand your pension/retirement benefits offered by your job. Is it a defined benefit plan or a defined contribution plan? Does the district allow you to make additional contributions? Go learn what you need to know so you can think about retirement planning as another piece of this puzzle.
Posted on 10/1/20 at 11:44 am to Pedro
Are any of them Perkins loans? If so you may not have to wait 5 years for some loan cancelation.
I'd be cautious about buying a cheap small 2 BR anywhere. Will it rent to good tenants when you eventually move to something bigger? Is it in a decent area/school district? Is neighborhood at risk of decline? Factor in property tax, closing costs, realtor fees, repairs (foreseen and emergencies), PMI, homeowners insurance, move in expenses, interest payments etc... Buying isn't always the best financially. Ownership involves a ton of sunk costs and you're still "throwing money away" just in different ways. Only part that is building your net worth is the amount going to principal and any potential price appreciation (uncertain in current sellers market) plus any rent savings you actually invest. If rates to up, economy falters, etc price might fall and you'll be holding on for years waiting to get back to even. Bought our first house near top of a rising market in 2005 and it was worth less when we sold it 12 years later.
I'd probably wait at least until you can avoid PMI.
I'd be cautious about buying a cheap small 2 BR anywhere. Will it rent to good tenants when you eventually move to something bigger? Is it in a decent area/school district? Is neighborhood at risk of decline? Factor in property tax, closing costs, realtor fees, repairs (foreseen and emergencies), PMI, homeowners insurance, move in expenses, interest payments etc... Buying isn't always the best financially. Ownership involves a ton of sunk costs and you're still "throwing money away" just in different ways. Only part that is building your net worth is the amount going to principal and any potential price appreciation (uncertain in current sellers market) plus any rent savings you actually invest. If rates to up, economy falters, etc price might fall and you'll be holding on for years waiting to get back to even. Bought our first house near top of a rising market in 2005 and it was worth less when we sold it 12 years later.
I'd probably wait at least until you can avoid PMI.
Posted on 10/1/20 at 11:56 am to TorchtheFlyingTiger
quote:I don't think they are. At leas it's not labeled as such on the site. I'm assuming that's something I would know if it was right?
Are any of them Perkins loans? If so you may not have to wait 5 years for some loan cancelation.
Posted on 10/1/20 at 12:03 pm to Pedro
Natl Consumer Law Center
"You can also call the Federal Student Aid Information Center, 1-800-4-FED-AID, TDD 1-800-730-8913. The Center’s counselors can help you figure out what types of loans you have.
Federal loan promissory notes and applications will state the name of the federal loan program (Stafford, PLUS, Perkins, FFEL, William D. Ford Direct Loan Program, etc.) at the top of your monthly bill, and loan contract."
"You can also call the Federal Student Aid Information Center, 1-800-4-FED-AID, TDD 1-800-730-8913. The Center’s counselors can help you figure out what types of loans you have.
Federal loan promissory notes and applications will state the name of the federal loan program (Stafford, PLUS, Perkins, FFEL, William D. Ford Direct Loan Program, etc.) at the top of your monthly bill, and loan contract."
Posted on 10/1/20 at 12:19 pm to TorchtheFlyingTiger
Looking at the site the only things I'm seeing are 2 Direct Subsidized and 7 Direct Unsubed.
Posted on 10/1/20 at 1:21 pm to Pedro
26? and you signed up in 2008? at 14?
chicken shoulda been doing age verifications. no wonder we had such shite posters on certain boards here for years. dealing with kids!
chicken shoulda been doing age verifications. no wonder we had such shite posters on certain boards here for years. dealing with kids!
Posted on 10/1/20 at 1:55 pm to Fat Bastard
yeaaaa this place has warped me. haha I think I was 13 when I signed up actually.
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