Student Loans and Investing/Retirement

iFly86

iFly86

Well-Known Member
Hello,
I am currently bogged down by student loan debt. I am looking into options on private loan consolidation so that I can free up my monthly paycheck slightly more to put into retirement and invest once I pay loans down more. I have tried CUStudentloans with little success. I don't want to go apply everywhere cause I know every pull lowers credit score and that is what they base the rate on. I currently have a pretty good score (700+) so I think I should get a decent rate (better than what I have based on score increase). Lower Interest rate = less I owe and quicker I get done with it. Wondering if anyone dealt with any other banks out there and opinions. I am currently doing the 3% match our company offers but that is all and in the big picture need to be putting away more. Any advice would be great!

Thanks
Zach
 
What interest rate do you have on the loans? With a 700 credit rating you might not find better rates.
 
The low is 4.5 (highly doubt I beat it) and the big loan is 7.5. Hoping to split the difference.
 
You might be able to get a lower rate on the big loan. I would budget and throw money at that big loan for a bit to get your credit up then maybe try again for a loan with a lower rate.
 
When I was looking at consolidating my student loans I made a spreadsheet with a five year outlook. I found out I would save money by not consolodating and paying extra on the highest interest loan first. As for reducing your monthly payment to put into retirement more I would stop contributing to retirement except for what your company will match and just attack your student loans. Wealth will accumulate a lot faster if you do not have those loans hanging over your head.
 
scott_l said:
When I was looking at consolidating my student loans I made a spreadsheet with a five year outlook. I found out I would save money by not consolodating and paying extra on the highest interest loan first. As for reducing your monthly payment to put into retirement more I would stop contributing to retirement except for what your company will match and just attack your student loans. Wealth will accumulate a lot faster if you do not have those loans hanging over your head.
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Good advice. There are times when consolidating may not be the best route. Always contribute to your retirement plan up to the company match, and concentrate on paying high interest loans first.

In the meantime, and I can't stress this enough, live within your means!
 
First, about your credit. If your rating is over 700, then you're unlikely to find better rates on something like this. Occasionally a very picky lender that is offering a large loan with no documentation will want to see something in the 720-730+ range, but generally, anything over 680 is looked highly upon and gets you the best rates, even on a mortgage. You also shouldn't worry about the inquiries, because a series of credit inquiries from the same type of institution are supposed to get lumped together and counted as a single inquiry on your report. For example, if you shop around to six different lenders to get qualified to buy a house, that would only count as one credit inquiry, not six. I can't imagine that it would be any different for loan consolidation inquiries.

The advice above is definitely good advice about contributing to your 401k to the company match. If they're matching 100% of the first 5%, for example, then you're getting an immediate 100% return on your money if you contribute the 5%. So don't leave that money on the table.

But after you get the match, focus on putting all of the money towards your 7.5% loan. Beating that interest rate with investment returns would be difficult for most people, so paying that loan off is important. After that one is paid off, I would pay the minimum on the 4.5% loan. You should be able to easily beat 4.5% with your investments, so you'd be better off putting your extra money towards investing rather than paying off that low interest loan.

Just my opinion, not investment advice. Don't sue me. :)
 
I don't know if any of your loans are Wells Fargo loans but I read the other day that for a short time they are offering student loan refinancing of sorts now for their borrowers. Good luck.
 
I'm one for debt snow ball. Pay off your lowest balance first at whatever rate it is. Then put what you were paying on that towards the next biggest debt. My wife and I will be student debt and cc debt free in four months doing this. We still owe on her car that we just bought but we will pay it off three years early using this method.
 
This method is based on pure psychology. It's easier for a family to stay on track when they accomplish more smaller goals along the way. I am very good at math and have worked in the financial field. Most people can't stay on track with making extra payments on large amounts of debt but when they start with the smallest loan and pay it off in just a few months they feel accomplishment and zero pinch moving those payments to the next biggest loan and so on.


Also... relax :ooh:
 
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ATN_Pilot said:
Ahhh, my head is going to explode! Does no one learn math anymore?! :bang::bang::bang::bang::bang:
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Relax. Money and spending is an emotional issue to some. Sometimes logic and math won't change behavior. Get over it. It's like telling an overweight person they need more calories out than in - sure, it makes sense - but it's hard to do emotionally.
 
MikeFavinger said:
Relax. Money and spending is an emotional issue to some. Sometimes logic and math won't change behavior. Get over it. It's like telling an overweight person they need more calories out than in - sure, it makes sense - but it's hard to do emotionally.
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I'm not sure it's like that. It's like a fat person that starts walking five miles a day and keep eating the same amount. Sure they could be running up a mountain but they might give up just a little quicker.
 
So what you're saying is that you are so mentally and emotionally weak that you need to trick yourself into thinking that you're paying off your debt when you're really paying it off more slowly and costing yourself more money in interest?

I weep for America's future.
 
Wow. I'm guessing by your tone there it's been a while since you've seen your man parts. Perk up buddy. It happens sometime. I recommend starting to walk five miles a day or so. :stir:



Side note: For anyone that feels the need to talk to someone like the previous post I make myself readily available to meet face to face.
 
It doesn't work for everyone. It really doesn't. I know that. It did work for me though. I am young (27) and only have $25k for retirement and two small bills remaining until I am debt free.

It's actually based on the Dave Ramsey program. I borrowed money for a car so I fail there but the debt numbers are quickly decreasing and the retirement gains are quickly increasing.

I see above that it's hard for most people to make 7% or more as well on their investment. The market average over the last 30 years is 10% so that should be fairly simple. Also if someone has the time to keep on top of their investments it's pretty easy to make 15% average. It's so simple a Brian can do it.
 
brian434 said:
It doesn't work for everyone. It really doesn't. I know that. It did work for me though. I am young (27) and only have $25k for retirement and two small bills remaining until I am debt free.

It's actually based on the Dave Ramsey program. I borrowed money for a car so I fail there but the debt numbers are quickly decreasing and the retirement gains are quickly increasing.

I see above that it's hard for most people to make 7% or more as well on their investment. The market average over the last 30 years is 10% so that should be fairly simple. Also if someone has the time to keep on top of their investments it's pretty easy to make 15% average. It's so simple a Brian can do it.
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By what metric are you saying it works or doesn't work? Will you pay off the debt? Yes if you make payments you'll always pay off debt. I guess I just can't wrap my head around a concept that you acknowledge costs more because of a choice of allocation. If you are struggling with that fact it pains me to think you will be successful in investing.
 
brian434 said:
Wow. I'm guessing by your tone there it's been a while since you've seen your man parts. Perk up buddy. It happens sometime. I recommend starting to walk five miles a day or so. :stir:



Side note: For anyone that feels the need to talk to someone like the previous post I make myself readily available to meet face to face.
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What exactly do my "man parts" have to do with a discussion on finances? I'm a bit disturbed that some dude is thinking about my "man parts."

And I'll be at NJC this year in Vegas. Feel free to talk face to face. I'll say the same thing.
 
brian434 said:
It doesn't work for everyone. It really doesn't. I know that. It did work for me though.
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No, it didn't. Sure, as @mikecweb points out, you'll be debt free, but that's hardly a measure of success. If someone who is smart enough to ignore Ramsey pays off his debt the mathematically correct way and saves $5,000 in interest over you and your "debt snowball," then who was really successful? No one who voluntarily gives extra money to a bank in interest is winning.
 
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