{ "media_type": "text", "post_content": "Anyone have tips for paying off $136k of student loans (undergrad and mba)? I’m trying to make large payments but now I have no savings or 401k. I’m 25 and just stressed as hell about this :(", "post_id": "5d745215aa4c7600220aa93a", "reply_count": 39, "vote_count": 4, "bowl_id": "552d1d24dc1c586b09d2d051", "bowl_name": "Consulting" }

Anyone have tips for paying off $136k of student loans (undergrad and mba)? I’m trying to make large payments but now I have no savings or 401k. I’m 25 and just stressed as hell about this :(

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That’s almost exactly what I had after undergrad and 2 masters degrees. I lost many many nights sleep and felt an enormous amount of stress. Thought I’d retire or die before I paid it off. I’m sorry you’re going through it. Find a fiduciary, they can help you run scenarios. It really depends on your budget. Ultimately for us, we decided to not contribute much to a 401k until they are paid off. With a downturn in the market likely we’re not investing much now and decided to pile everything we could into it. We bought a house half as expensive as we ‘could afford’ and now put more into my loans each month than our mortgage to try to get them down as quickly as possible. Knowing if something does happen to one of our incomes we could always back off. There are refinancing option through Deloitte. We’ve been on the fence about taking advantage of that. While we could get a MUCH better interest rate, the flexibility of repayment plans if I stick with the federal loans if one of us loses our jobs has won out. Message me if you want!

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Do not stress yourself out. Do NOT refinance. In a dying emergency you can defer your loans. If you cannot for some reason make your payments to a private lender, you credit score will tank. Keep paying the baby loans off one at a time, then attack the larger ones. Write out your budget, take a deep breathe, and as my mom says, “Never give anyone all your money.” Do not pay all of your check toward bills. Keep some money to save. Remember to save up at least $2k.

About to finish paying off ~$100k from UG. As others have said, keep monthly expenses down and just throw everything you have at them. I set up a high interest savings account and set up direct deposit right into that account so I didn’t get a chance to see it/spend it. Had my emergency fund in there and made student loan payments out of savings account so I at least got some interest. Also explore the option of making bi-weekly payments as opposed to monthly payments - helps save some interest from accumulating. It can be done, just gotta focus and make it a priority.

Minimum to 401K to get matching look at minimum on the loan. Look at cost of living for you. Then see what if any is available. If still some left up the loan payment and rest to build some cash reserve. Re-evaluate in 6 months. Or after a raise or bonus. After each review determine improvement of extra money throw 10% into cash and 80 in lump payment to loan. Paying the loan off and putting yourself into barely making ends meet may work fine but you will appreciate the little cash savings for spurge in something to help with pressure of job. Most of my lines Had low interest and each raise or bonus help pay some larger amounts on the loan. Once the loan is paid you will find that 401k has grown more than you thought and you have a small cash fund for rainy days and the money no longer going to your loan can go to increase your 401k. As long as you make the loan payments it is not worth the effort to stress over how long.

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I recommend looking at all the little bitty numbers that make up the 136k. Typically, packages are comprised of lots of individual loans. Knock those down one by one, smallest to largest. It’s called the Snowball Method. Check out Dave Ramsey on YouTube. Game changing.

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I just started at the firm back in May and I’m just pushing through to get promoted to SC and hopefully I can pay these faster. I hope my kids never have to go through this :(

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Start with only putting enough in 401k to get employer match, also, keep a small emergency fund, about 2-3 months worth of bills. Put all remaining toward high interest debt, e.g. credit cards, once those are paid, focus on student loans.

likesmart

Snowball is good for people who can’t stay disciplined. Avalanche is better. Pay off the highest interest rate ones first. The math works out. You’ll be paying less interest that way.

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There’s no satisfaction in avalanche. You don’t SEE results as quick. Whatever keeps people motivated, I’m for that.

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Minimize your monthly expenses and remove all that aren’t necessary. Ie if you live alone, find roommates to decrease rent cost, if you have a car, consider selling it and using public transportation, etc etc

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Working on this! I live at home and don’t pay rent/mortgage so I need to reprioritize my spending

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first off congrats - go splurge on yourself for getting those. afterwards come back when you’re done

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I don’t know what you’re saying lol

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Paying off debt is saving in a sense it’s unlikely you will get a greater guaranteed return elsewhere. Once you have built an emergency fund go crazy on the debt. I highly recommend looking into Dave Ramsey his debt payoff methods are good though his advice on credit cards and investing while isn’t the worst isn’t the best either.

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I was 31 MBA with $125k and my wife had another $175k from a masters program, we paid all off in 4 years 1- pay off the higher interest chunks 2- if you get an offer for 0% balance transfer credit card - use that offer to see if you can pay off a higher interest chunk from 1 above 3- do contribute to 401k, you need to get your pretax income down so that the %tax is lower and your interest payments deductions give you more - imagine this if your income is $100k and your student loan interest is $10k you aren’t getting much benefits but if you contribute $18k to 401k all of a sudden that $10k in tax deductions is awesome 4- it’s going to be painful 😖 5- take a travel gig so you can expense your meals and other incidentals 6- move in with a roommate or parents

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Keep paying down the principle. I think people get into huge trouble when they defer loans and end up capitalizing interest payments

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Unfortunately I deferred undergrad loans during grad school so I have $9k in interest. I’m trying to make large payments each month

I would save about 2-4K so you have an emergency fund, put enough in your 401k so you’re getting the match (don’t skip the free money with compound interest), and the get super intense (as in, beans and rice intense) about paying off the debt and incurring zero new debt. No personal credit cards at all. You’ll be amazed at how fast you can make progress!!

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@op deloitte contributes 25% of 6% of your paycheck, so set it up to contribute 6% each time.

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I would talk to a financial advisor about your specific situation, but if the interest rate is less than 6%, it’s generally recommended to just pay the minimum amount and put the rest of the money into your retirement and taxable investments. No need to pay it off faster than needed. Here’s a good article: https://www.nerdwallet.com/article/loans/student-loans/save-invest-pay-off-student-loans

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Like I mentioned above, it’s best that they talk to a financial advisor for their specific situation. The article I linked goes into more detail, but the basic logic still holds that if you think that your investment returns will be greater than the interest on the loan, the investments are worth considering. I’m less risk averse, so I personally don’t need a 3% interest rate since I invest in low cost index funds that give me a return of around 8%. Around 5 to 6% would be good enough for me. There’s definitely a psychological load to holding a lot of debt, so it’s understandable to want to pay it off quickly as well. OP, treat our insights with skepticism and then talk to a financial advisor who knows your specific situation.

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Dave Ramsey

smart

136k seems like a lot of debt. I had ~50k after my masters and I was thinking I took on way too much. Just out of curiosity did you do any internships or co-op?

I learned Swahili.... I’d say you did better than I 😄

Stay living at home until they are completely paid off. Even when you get promoted. Have spending allowances. Maybe have multiple accounts and pay yourself.

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