Another student loan question!

**maat55** · 07-10-2012, 07:17 PM

Welcome to the forum.

Stop funding the whole life policy. If it has a cash value, put it towards the smaller loan.

Are you married? Why do you have life insurance( go with term)? How much do you have in savings?

What is your monthly living expense? You should have about 1 months savings, payoff the smaller loan, then work to payoff the 12k loan.

**bjl584** · 07-11-2012, 05:55 AM

I agree with matt. Dump the whole life. If you need insurance go with term. And, I'd pay off the private loan first.

**snafu** · 07-11-2012, 07:40 AM

Welcome to SA Kent. Good on you for your financial awareness. We all have different backgrounds, experience and viewpoints but we know how important it is to take care of our money. One basic benchmark has us roughly split all sources of income into 20% SAVINGS, 50% NEEDS & 30% WANTS. It's important to have an emergency fund to ameliorate the challenges life throws your way. The problem with whole life is that it rewards your salesman with on going commissions more than it benefits you. If you need insurance, buy/convert to term insurance which is meant to protect your family. Create an investment program which has potential to move your financial plan forward.

I am guessing you have some sort of credit card and it's important for both your financial health and credit score to use it to your advantage which means paying the entire balance by it's due date. If you're paying interest you may as well visualize yourself standing at your doorstep and burning those dollars used for fees and interest charges. It's incredibly important to contribute to your retirement as it depends on time to compound to sums needed w-aaay in the future. If your employment has any matching funds grab that free money! If not plan contributions of 10% - 12% picturing it as your personal pension scheme.

We don't know your financial obligations or attitude towards Risk. I hope you will think about it as it relates to current economic conditions. Personally, I think you need to give every dollar a task. You control your cash flow to cover your costs [needs], wants and split savings to create EF [emergency fund], Retirement [pension] and escalate clearing that $ 5,400 SL. We use any tax refund to help the retirement fund reach it's $$ goal.

**tan fish** · 07-24-2012, 07:29 PM

Remember also to try and make extra payments on your loan as soon after the monthly due date as possible, that way the majority of your extra payment will go towards reducing the loan's principle, rather than the interest. Good luck!

**Max G** · 07-25-2012, 07:31 AM

As couple of people said already take the money from your whole life insurance policy and put it into paying off your private loans (I assume they have interest). If you are married and have small kids or planning to start a family that you want to protect in case of your death get yourself a term life insurance (say 20 years). It's much cheaper and will give them an adequate protection while your kids are young.

**asapcc** · 07-26-2012, 10:37 AM

Agree with the other posters about the life insurance. If you're debating which student loan to paydown first or put extra money torwards, pay the one with the highest interest rate first. This will reduce the amount of interest charges you pay over time...

**dontgopoor** · 07-31-2012, 09:47 AM

I think the previous posters have given good advice. I'll tweak it slightly:

1. Agree to stop the whole life and pursue term if you have a family. No family = no need for life insurance.
2. Any excess funds should go toward the loan with the highest interest rate. But check that the private loan does not have a prepayment penalty - it should not but I would check anyway
3. It is a lot easier to keep wants to a minimum when you're young and single so your overall interest expense will be minimized if you can forgo as many wants as possible until debt is zero.
4. I'd keep at least 3 months of expenses in savings.

I speak from the positive experience of forgoing wants when I was young. I have enjoyed many, many, many more wants over the years than I would have if I had taken on more wants in my 20s.

Good luck. You seem to have a good understanding of how to manage your expenses.

**SeanH** · 08-01-2012, 09:11 AM

I wonder if you would consider tithing your time rather than your money. I've seen some uncomfortable posts on here concerning tithing and I don't intend to disrespect, but your church is receiving almost as much as your savings and retirement. For perspective, in 2008 I had $17,000 in loans (6.8%) and made $42,000. I squandered quite a bit of wealth enjoying my new-found employment, but was able to pay off those loans 2 years later and substantially increase my savings and retirement.

You haven't posted your life situation / monthly expenses yet but if you are living alone I would strongly suggest you get a roommate. Among my friends and the apartments (in 2 different states) I've lived in it seems like $850 seems to be the basement that anything today will price at. We can quibble about the amount, but sharing rent on any apartment above $600 is going to put more savings in your hand than you are putting away right now. Again - these comments are just ideas based on not knowing your situation. I think you could have more money in your budget than you know, but your life situation may not support that.

**pandaindebt** · 08-14-2012, 01:26 PM

To echo everyone about not having to put money into life insurance, don't most car insurances offer that as well?

Another student loan question!