Can you refi the loan debt? Does DH’s employer have any kind of loan forgiveness program?
I wouldn’t pay off all of your debt now. If you can start making double payments but I wouldn’t go through all of yours savings to pay it all off. You have three kids to put through college in the next 10 years, right? I would save the money for that or for your house once the student loan debt is paid off. If you move to a more reasonable COL state when you retire then that would be a good place for your savings. Yes buying a home isn’t viable solution right now but in the long term your kids wouldn’t have to worry about you as you age. Maybe look at some long term care insurance as I have heard that gets even more expensive as you age. You also have enough to buy a car of your current car decides to no longer work and you will always need at least one car.
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Annie
WOHM to two wonderful little girls born in April
DD E, 17
DD L, 13,
baby 2, 4-2009 (our Tri-18 baby)
I understand your DH's desire to just have them gone, but financial decisions made for emotional reasons are rarely good.
The precarious housing and employment situations are the factors I would keep in mind. 6 months from now, there should be more clarity on those and it is worth the interest in the meantime to keep the flexibility of both the cash in hand and the ability to defer the payments. If you pay them off and then get hit with large expenses, you could end up with worse debt and no cash.
I would find an online calculator and look at the time to repay and total interest at the current payment level. Then run scenarios with various extra payment amounts. Find a level that gives him the emotional satisfaction of saving $X and paying off Y months early without completely draining your savings in the next 6-12 months. If you can say we will save $5000 and pay them off 1 year early, for example, will that make him feel better? Or maybe a target of when DS1 goes to college in 18 months?
If you paid them off, how long until you would be able to replace that savings?
Maybe a plan of paying $X thousand now (say $5-10k), and then when your savings is back to the same level, repeat?
Trying to balance his desire to get the emotional satisfaction of seeing a big drop while keeping the liquidity you have worked hard to get to.
First off, congratulations! You are doing so awesome paying that down!
I think I would decide how much is my minimum to have in savings. Maybe that number is $20k or $40k. Whatever makes sense to cover some college, housing, etc that might come up in the next year (or years). Pay down the loan with how much is over that and then keep sending any extra to the loan instead of increasing your savings.
If that's too uncomfortable, maybe taking $x per month from the savings to add to your payments on the loan. Take $2000 per month out of savings to send to the loans. That way it's going down faster, but the savings balance isn't going down all at once and you can stop if you need to.
How much is the student loan payment each month? You'll be able to add that to savings when done paying it off.
Kris
Agree, I just think the minimum needs to be based on a higher rent than what is currently paid given the housing situation. I really couldn’t pay it all off unless like a PP suggested, they dropped the balance drastically to 30k to pay it off now. Different times and with different uncertainties back on 08 and we were saving to buy a bigger house, but DH and I compromised on this by doing large quarterly payments. Inching through the year 3 months at a time and seeing more stability in our country and in our local area made me more comfortable with parting with large amounts, but DH got some satisfaction of seeing large balance reductions.
You’ve done an amazing job!
I am astonished you’ve been so good about budgeting and saving and paying off old stuff! Share YOUR tips!
The idea of asking for a payoff amount sounds like a great one. And although I’ve never sat there with $60k in savings, I feel like I’m the housing situation, going below $40-45K with car, college, downpayment etc. sounds risky.
But yeah, way to go!
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What is your college plan for your DS? If he has target schools, check their websites to see if they have net price calculators. That’ll give you an idea of what loans and financial aid (if any) he’ll qualify for, and some schools have set merit scholarships that will be included in their calculators too.
I think the plan to call loan place and lay it out that you have a lump sum to pay it off (15-20K) and ask for loan to be forgiven. Or at very least if denied ask for refi to lower interest rate if you pay lump sum of 15K.
I wouldn’t blown most of your savings to wiping out the student loan. Saving 60K is a great achievement! I’d sit on that as housing is in a weird trajectory right now, so you want to have some cushion ready at the go.
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Mummy to DS1-6/11 and DS2-1/14
I would pay it off, that rate is high and without making payments you will be able to start building your savings back up. But I am super debt averse, even when it makes sense (we don't even have a mortgage). I like the suggestion of trying to negotiate, but not sure how/if that works.