Need Advice on My Situation

**disneysteve** · 07-19-2009, 06:57 AM

If your brother and father are keeping up with their end of the bargain and making the payments on those debts, that's great. Just be absolutely sure they are paying on time every month. If they are late, it will wreck your credit score. Do they actually send in the payments or do they pay you and you make the payments? It would be best if you made them just so you could be sure they were made on time.

Your take-home pay is only 64% of gross. That doesn't seem right. Why is 36% going to taxes or are there other deductions like health insurance premiums, dental coverage, retirement contributions, etc.?

Not that it is a lot of money, but do you really need a haircut every 3 weeks?

It is great that you are putting $500/month into savings, but you've got a decent EF of $6,500 which is also enough for a security deposit and first month rent on an apartment. I think you need to start attacking your debt with at least some of that $500 each month.

**GREENBACK** · 07-19-2009, 07:06 AM

I agree on attacking debt here. You are earning 1.4% from E.D.. Look at the interest rate you're paying to the other loans. You have more than enough of a EF(if you're counting the E.D. account) for your situation. If the E.D. account isn't a EF you should put it somewhere to earn more(a long term CD at least). use that $500/month to pay off the debts.

**GREENBACK** · 07-19-2009, 07:10 AM

Meant to mention that loaning money is a tricky thing especially with family members as you have learned. My rule is that when I loan money to people I do so with no expectation of getting it back. I.E., it's a gift. This type of thinking can save you money and strained relationships with friends and loved ones

**skives** · 07-19-2009, 07:18 AM

I knew I would forget something. I do have insurance deductions from my paycheck about $20 a week. Also I put 12% before taxes in my 401k, which has $18,200 in it and is not matched by my employer.

The haircut every three weeks could be changed to every 4 weeks I guess. My hair just grows fast.

The debt my brother pays on is automacally deducted from his credit union account each month. Plus I can check the account online anytime.

The debt my dad pays on I check online. I usually tell him the amount due and date and he has his bank automatically send the payment out.

So I can always check these two accounts and I trust my family. If for some unforseen reason they didn't get paid I have emergency money and they can pay me back.

As for putting some of that $500 on my debt, how much do you think I should put on my debt a month and on what debt should I put it on?

**skives** · 07-19-2009, 07:27 AM

Don't you guys think cash on hand is better than putting extra on debt? I always go back and forth on that. Should save my E.D. Account to $10,000 and then put it in a CD. I always think want if I need that money in the CD. The E.D. Account is for the future like down payment on car or house.

Should the extra $500 be put on my private loan as it has a variable rate and can't be put in forbarence or deferment?

**skives** · 07-19-2009, 07:38 AM

I also think that if I am saving that $500 a month later on if I didn't need it for an emergency or down payment I could put all or some of it on the Student Loans at a later time. What do you guys think about that?

**creditcardfree** · 07-19-2009, 07:58 AM

Originally posted by skives View Post

Should the extra $500 be put on my private loan as it has a variable rate and can't be put in forbarence or deferment?

Yes, I think the full $500 should be added each month to your private student loan. For your age and living situation, there is not an immediate need for more emergency savings. While you live at home and have few obligations, it is important to get rid of as much debt as possible. Your debt is costing you more in interest that your savings is earning.

Good luck.

**skives** · 07-19-2009, 08:05 AM

Should I wait to put that $500 on the private loan till I have $10,000 in my emigrant direct account and switched that account to a better interest CD?

**Tree0164** · 07-19-2009, 08:10 AM

As long as your Dad and brother are making those payments I wouldn't focus on that.

You have high student loan debt-I would focus my energies on getting the private student loan paid off. I would take the $500 you have going towards an EF and put it towards the private student loan.

Will there be possibilities of increasing your income?

**skives** · 07-19-2009, 08:23 AM

The income I stated in my first post doesn't included the 6 holidays I get paid for or any overtime, which gives me some extra money. I am trying to get into management to make more money.

**creditcardfree** · 07-19-2009, 09:02 AM

There's nothing wrong with saving more for emergencies, but in your situation you have plenty of money for those. Saving another $3500, just to get a better interest rate isn't a good reason, when the interest you are paying on your loan is much more than what you will earn on a savings account with Emmigrant Direct.

Why not put the holiday and overtime pay into savings or any other money that you find, but put the $500 towards the loan. The loan REALLY needs to be your priority and focus.

**disneysteve** · 07-19-2009, 10:45 AM

Originally posted by skives View Post

I put 12% before taxes in my 401k

This is very admirable, but at this point in your life, I wouldn't have a problem with cutting that back a bit, maybe to 10%, until you get your loans out of the way. Since there is no company match, you may also want to consider putting the first $5,000 of retirement savings each year into a Roth IRA instead of the 401k.

Originally posted by creditcardfree View Post

There's nothing wrong with saving more for emergencies, but in your situation you have plenty of money for those. Saving another $3500, just to get a better interest rate isn't a good reason, when the interest you are paying on your loan is much more than what you will earn on a savings account with Emmigrant Direct.

Why not put the holiday and overtime pay into savings or any other money that you find, but put the $500 towards the loan. The loan REALLY needs to be your priority and focus.

I agree. You've got a nice EF. Plus, the overtime pay and bonuses can be used to add to savings. Put the $500 toward the private loan.

**elessar78** · 07-19-2009, 02:42 PM

Cash on hand is usually great, but not in this case since you have debt. I'd just put that extra cash toward the student loans. I would attack your Fed loans first. Paying $500/month, it'll take 6.5 years to pay it off and a little over $6,100 in interest. Similarly, at your current rate you'll pay off the Private student loans in just under 6 years (about $4,500 in interest).

It seems like a long ways away before you can start building up your savings again but more than likely your income will grow in that time which will let you get out of debt faster, back to saving, and eventually investing and building wealth.

**anonymous_saver** · 07-20-2009, 07:34 AM

Good job on looking at your money situation.

Do you contribute up to your match in your retirement account at work? If not, I would do so immediately.

I think getting a haircut a little less often would be a great idea, or even better, do you know if your girlfriend would be willing to learn how to do that for you? Save tons of money.

Also, spending $100/week on dates and other entertainment sounds like a lot of money. Could you cut this down in half? This would really help you pay off your debt faster, and I'm sure your GF would appreciate that. If she doesn't, tell her she's ridiculous!

I would stop putting the $500/month into Emigrant. You have a decent emergency fund to start with, so I would use this money towards paying off the highest interest debt first.

Good luck, I'll look forward to hearing what you decide to do.

Need Advice on My Situation