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Off Topic : 1) When Does a software engineer start financial planning for retirement since the our Career span is only 15-20 years on average.
2) How much and which schemes to invest to mitigate the risk?
3) How much do we need for retirement? Tata Consultancy Infosys Mindtree IBM Wipro Capgemini Cognizant HCL Technologies
Hello.. i have 6 years of experience in frontend development. I have offer of 27.5 from Nagarro (client to be decided yet) and 30 from HCL Technologies (apple client and work location also apple) and 26 from Netcracker Technology Corp. maybe with some joining bonus. Which do you think I should join.
Bonus is out for EY GDS steps to see. Goto gdsindiapayroll.greythr.com, click on IT Declaration on left. Then click on My Tax Planner at the top right. Then click create my plan then click view it calculation on bottom right then expand income here under adhoc income you should see variable performance bonus amout.
Anyone got salary today??
401k Roth or traditional 401k?
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Because you’d pay much more interest over the entire life of the loan as compared to paying it off over a shorter period.
D12 is right. Student Loan Cancellation will happen in our lifetime. No sense paying anything more than the minimum. I work overseas so my on-time monthly payments are $0. The moment I go back to the US, ~17k/year in loan payments will be factored into my budget. Unless someone give you a sweetheart 1-2% 30yr private loan, not worth paying off.
Enthusiast
So I’m the opposite, I put 2K+ a month to my loans and treat it like another rent - my savings don’t go up but I know after it’s paid off I never have to worry about it again and can save the money and go invest
Doing the same, about $70k left in loans, pay between $1000-2000 per month. I want the loans gone (especially w interest paused) so I can start saving and not worry about them. I think it’s the smart move to pay them as fast as possible and what financial advisors have told me.
What others have said.
It’s also the idea that you’re potentially still paying off your own student loans at the same time as you are paying for your children’s college education (assuming you would be in your 50s and making your final payments and that you have/will have children and will be contributing to their higher ed, which is true for many people).
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Same for me. Unless the loan has any detrimental affect on my credit score, which I don't think it does, I don't see a point of overpaying
You care more about your credit score than your net worth? 🤯
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If you’re paying for 30 years you’re doing it wrong. If you’re on IBR they’re forgiven after 20 years (maybe 25?), just make sure you’ve got enough cash for the tax hit.
Rising Star
Also, this. Forgiven after 20 years, but the forgiven amount is taxed.
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Aside form the interest- it’s also the psychological effect, it just feels good to not owe money. Additionally people that prefer low monthly payments tend to apply that preference across other loans, once you calculate the combined interest rates it tends to become much more significant of an impact.
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This! I can’t wait to not be in debt and throw all extra money at my loans.
Very much looking forward to the feeling of having one less bill every month.
I pay $1600/month on student loans (5-year plan). Granted my salary allows me to do so while cutting back on other expenses - no car, $900/month rent and everything else in between. In the end, do you, as long as you’re paying it back then it’s whatever but remember...interest creeps up on you real fast.
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I get what you’re saying but I would not take that arrangement unless your allocation of money would out grow the interest due. For example, if paying that minimum will allow you to allocate the remainder to an investment that would out earn the interest then I would not care that I paid 30 years for that opportunity.
If your interests rates on your loans are low, then it’s generally wiser to save/invest the money instead of paying the loan off faster. 3% interest vs 6% ROI.
Create a loan amortization table. Excel has a free one. Enter ur details and see how much interest u r paying over different time frames (30 vs 15 vs 10).
On 80K loan, just as exmaple not accurate calculations:
- 30 yrs say u’d 120K as interest
- 15 yrs u’d see it drops to 80k
- 10 yrs u’d see it drop to say 50k
Most people choose smaller timeframes becoz u’d pay a significantly less amount by “Making Sacrifices” now. Delayed gratification.
The amount of interest you are paying is soooooooooooo much higher if you go that route. It’s better to make higher payments to knock it out faster.
Being debt free is a sense of utter freedom in your spirit. You think differently.
Try being debt free. If you don’t like it, you can always go back into debt.
Agree with the financial aspects mentioned by others above, but THE MOST IMPORTANT reasons are psychological and behavioral actually.
You feel and behave differently when you have student debt vs. no debt.
- When you have debt, you tend to defer beneficial things like investing, etc. which ends us having a huge impact on your retirement, owning a home, etc.
- In 10-30 years, do you still want the debt obligation hanging over you every single month or would you want the freedom to take time off work or take a risk on a new job?
It’s easier to make progress on loans earlier in life vs. later.
- You’re more used to a frugal lifestyle coming out of school vs. later now the line
- Many of your peers are also short on money so it’s not as big of a social impediment
- Lifestyle creep is REAL. People overwhelmingly spend their increases in income and don’t make progress on their debt
Keep your expenses super low and PAY DOWN DEBT AGGRESSIVELY. You’ll never regret that decision.
- Look at older folks who are still making loan payments vs. those that made sacrifices and paid them off and CHOOSE who you’d rather be.
Good luck!
Let me give this a try. My wife and I took the payoff your debts approach at $75K in loans and a friend of ours took the minimum payment route at 45K in loans. both families make roughly the same amount per year. Fast forward 10 years and decide which you like better.
My wife and I have almost completely paid off our debt. Just a couple payments left on hers since it was really low interest. We have $50K in stock live in a town house that is getting too small for us but have almost $100K in equity to buy a new house in the next 2-3 years. We also are putting away $15K or so per year for retirement and have started a college savings plan for kids.
Our friend. Still owes $40K in student loans after 10 years. They have no stock and no college savings. Recently sold their house at a loss borrowing money from mom to cover the gap. They also recently took a sizable loan from retirement to buy a $600K house. They also struggling when big expenses hit like a car repair.
Which life style sounds more appealing to you. Pay debt build equity live with used cars and smaller house a little longer or go get all the dream stuff right now at an unknown financial hit later in life.
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Agreed, if you are disciplined and willing to take on risk you may be able to invest in things that provide a greater return.
The reality is most people just spend the difference or are not sophisticated enough to get a risk adjusted return in excess of the debt interest rate
I think it’s about taking a hit to your lifestyle now, so that you can begin saving and investing sooner, and ultimately end in a better place than if you continue on an uninterrupted path.
Totally depends on your interest rate. What is it?
It depends on your rate. If you are using the money you put away for investing and the return is higher than the loan rate, then you are doing the right thing. Otherwise if you can afford paying a couple hundred bucks more, that would get the burden off your shoulder faster.
As other people have said, it depends on the interest rate. If it’s below 5%, and you’re investing what you would’ve paid to those loans into retirement accounts, then your assets are growing at a faster rate than your liabilities, which is a good thing.
what do you care more about? cash flow or total cost?
also, i would argue that getting a 30yr loan is better than a short term if your return on the delta is higher than interest paid
I pay 900 (sometimes 1000 if I’m in a good space) a month and I just want to get it over with....have about five years left, which will put me at 9 years total with my loan. It definitely hurt when I first got out of school, but now it’s completely manageable. I did refinancing with SoFi because when I had it with Nelnet, the principal never went down.
For me, it was just seeing a light at the end of the tunnel. If anyone is considering refinancing, do it.
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OP, numbers won’t lie, just share with us the amount of loan outstanding and the interest rate on the loan, a quick calculation will help you make a more informed decision.
Hmm, it depends. You need to look at the interest rate. If you're not paying off your loan fast, will you be able to make the money somewhere else that have greater gain than the interest payments? Do the math and that's the answer.