Better place for my money

[duragezic]

I think I could be doing something better with my money. Nothing too complicated but just some basic areas to improve on.

I recently started paying off my student loans. I have $26,000 in student loans. Paying on the standard 10 year plan, I'll end up paying $36,000. The interest rate is pretty ridiculous IMO at 6.8% and higher. So much for college being affordable with low-interest government loans. :disgust:

I don't have a car payment. But my car is 16 years old now, so I probably will need to get a new car within a year. I use credit cards but pay off monthly. So my only debt is my student loans.

Every bit of my money is in a checking account with 1.50% interest. I contribute 6% of each paycheck to my Roth 401k (it is taxed right now instead of later) with 1:1 match. I was considering upping that percentage.

I think my job is pretty secure but you never know. I'll estimate that I have savings to live for 6 months without income plus about $7,000.

So where do you guys and girls see improvements could be made?

1) Do you see my retirement plan as the weakest area/should I increase there?
2) Or is the checking account interest foolish if I can get something a lot better?
3) Does it make any sense to pay off my student loans early? I always hear how that is so dumb to do, that the interest rate is so low that you can invest the money at a higher rate. I don't think the interest rate is that low, and I don't know where I could invest the money at a higher rate. Even before the current market, I'd need at least 8% return to be worth it, which in my limited knowledge seems like about the average. So I'd gain almost nothing, even in a better market.

Thanks.

 

[2Xtreme21]

Where are you keeping your savings? Find a higher-interest savings account and start putting rainy day money into that?

I am glad you asked this too, as I'm looking for advice as well, and we're in similar situations. I hope you get some good answers.

 

[jpeyton]

Invest heavily in AMD.

[/thread]

 

[Crono]

Pay off yours student loan. I don't care what people told you, it's always a good idea to get rid of debt. Your money is really yours as long as you have debt.

 

[clamum]

I'd like to hear people's opinions on this as well. I'm in a similar situation, but with about $12,500 in student loan debt, and could live on my savings for at least 6 - 8 months if I lost my job tomorrow. No other debt, credit cards always paid in full.

I just registered for my company's 401(k) plan where I contribute 6% and the company matches 0.5% for every 1% (or is it 2%? dunno) you contribute.

As for my savings/checking, that is in a local credit union with a 1% interest rate. I have an account on Mint.com and it suggests that I move that to an HSBC Online Payment Account where I could earn 1.75% interest (or other places from 1% - 1.5% interest). That sounds like a good deal and I don't have to do anything and will make money, but I haven't looked into it much.

 

[boomhower]

At 6.8% and up I would pay off the loan. If it was really low at 4% then yeah, you could do better investing it. In this economy earning 7% ain't bad, or necessarily easy. So my vote goes to paying it off.

 

[imported_Lothar]

Pay off your student loans. That's what I'm doing.

I had $50k in student loans($30k at 6.8% and $20k at 3.x%) during graduation.
I purposely didn't consolidate them together. I'm paying the minimum payment on both, while putting extra payments to the one at 6.8%. By this time next year, I will have paid all $30k on the 6.8% loan I owe including any interest accumulated on it.

 

[chusteczka]

My vote is to keep some money to buy a car (new or used) or for car repairs while you keep your current vehicle. Then keep enough in savings for comfort and pay off your student loan. 6% is a lot of money to pay right now and an 8% return on investment would be very lucky to receive and will involve more risk than you need right now. Monetary risk is really for those with extra money, you do not have any extra money right now.

 

[her209]

Do you plan on getting a girlfriend in the near term?

 

[clamum]

Bump

 

[Red Squirrel]

Yep pay off the loads as fast as you can, then save up the rest. For something easy to manage check if your bank has a "high interest savings account". I'm doing about 50 bucks per month with mine. Not really much, but still something. Or get a financial advisor and maybe look at stocks though that's risky, so I would not put everything in there, maybe just a small %.

Also lot of these high interest accounts have high service charges so don't use it as your main account.