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Old 09-27-2011, 03:34 PM
Drew Drew is offline
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Default Student Loan Debt

I am a senior economics major graduating in May, and I'm starting to think more about my student loan debt and the best way to go about tackling it. I do not have any other debt, but I have a significant amount of student loan debt. I go to a private university, and after I graduate I will have somewhere in the neighborhood of $40,000 in student loan debt. I currently work for the Air Force, and I will continue to work there after I graduate. I am also starting my MBA next fall, but the Air Force is paying for that.

Right now I am making $15,600/yr working part time (20 hrs/wk). When I graduate I will be making $38,790 for the first year. The next year I will be making $47,448. The third year I will be making $57,507. After that promotions are competitive, however I would consider my chances of getting promoted further within the next few years very good based on my education, the training program I'm in, and people I know who have been through the same program.

My question is how much of my income should I put towards paying down my debt? I realize there are other factors, but what would be an optimal or smart goal? What about other investments? Right now I have a federal retirement plan (Thrift Savings Plan) which has around $1,600 in it. I put 3% of every paycheck into it, and they will match up to 5%. I plan to up that to 5% when I graduate. I also have a money market account and a savings account with interest. Neither really have anything in them, but I get them without fees because of where I work.

Sorry for the long-winded post, any input is greatly appreciated!
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Old 09-27-2011, 05:11 PM
littleroc littleroc is offline
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Default Re: Student Loan Debt

Here's what ya do so that you start out on the right track and your young so this helps. Forget about the idea that people will tell you about compound interest and that you shouldn't pay off your debt quickly because you'll miss out. Is 5 million enough for you when you retire, then what others say doesn't calculate for risk, when you have debt you have more risk. So what if you took $15 from your 38k pay and applied that every year towards the student loans taht leaves you 23k to live on which is about 2k a month to live on. Rent cheap, don't do anything that costs money for almost 3 years and the loan is completely gone. Probably even faster since you'll be getting a raise each year, maybe more like 2 years. You said in the third year you will be making around 57k a year, so still take that 15k a year and put it into things like Roth IRA's, mutual funds, bonds and stocks and if you make the S&P average since the beginning of time you'll make a rate of return of around 11% and if you start this at age 25 and go for 40 years you have around 9 million, which is around 6.5 million and no debt. Can you handle that figure?
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Old 09-27-2011, 05:24 PM
Drew Drew is offline
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Default Re: Student Loan Debt

Quote:
Originally Posted by littleroc View Post
Here's what ya do so that you start out on the right track and your young so this helps. Forget about the idea that people will tell you about compound interest and that you shouldn't pay off your debt quickly because you'll miss out. Is 5 million enough for you when you retire, then what others say doesn't calculate for risk, when you have debt you have more risk. So what if you took $15 from your 38k pay and applied that every year towards the student loans taht leaves you 23k to live on which is about 2k a month to live on. Rent cheap, don't do anything that costs money for almost 3 years and the loan is completely gone. Probably even faster since you'll be getting a raise each year, maybe more like 2 years. You said in the third year you will be making around 57k a year, so still take that 15k a year and put it into things like Roth IRA's, mutual funds, bonds and stocks and if you make the S&P average since the beginning of time you'll make a rate of return of around 11% and if you start this at age 25 and go for 40 years you have around 9 million, which is around 6.5 million and no debt. Can you handle that figure?

Thanks for the detailed reply, 6.5 million sounds good to me! Sounds like a great plan.
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Old 09-28-2011, 09:25 AM
littleroc littleroc is offline
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Default Re: Student Loan Debt

The question is can you stick to a plan like this? It will require sacrafice and dedication.
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Old 09-28-2011, 09:29 AM
Drew Drew is offline
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Default Re: Student Loan Debt

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Originally Posted by littleroc View Post
The question is can you stick to a plan like this? It will require sacrafice and dedication.
I understand, I'm fairly disciplined and self-motivating (especially when it comes to money), I think it is definitely doable. The first year might be a little tough, but I think I can make it. It will be worth it to get that debt off my shoulders.
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Old 09-29-2011, 07:11 AM
MoiraJohn MoiraJohn is offline
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Default Re: Student Loan Debt

so in this question is can you stick to a plan like this? It will require sacrafice and dedication.
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