Please provide finances advice on my savings and debt

[Aznguy1872]

Hi everyone,

So I recently graduated from college, march 2009 and I was luckily able to find an engineering position But now, my loans are kicking in (have about 18K) and I am not sure if I should pay them off super fast (like <2 years and save a smaller amount money or pay lower payments towards the loan but save even more but taking longer (like 3-4 years). I am living at home with my parents so I don't pay for rent or food though I do give them money. I also don't have my own car so that may be an investment in the near future but the word "DEBT" scares me as I really want to ge tmy debt lower before buying a car and adding more debt. Am I playing too safe? I'm open to any advice. Thanks 🙂

 

[waffleironhead]

pay down as much as you can while still allowing yourself to live. Get a credit card and establish credit, so when you go to buy that car you have a decent credit rating.

 

[Aznguy1872]

Originally posted by: waffleironhead
pay down as much as you can while still allowing yourself to live. Get a credit card and establish credit, so when you go to buy that car you have a decent credit rating.

I do have a credit card and do charge everything to it to build credit, though you guys may think its bad that i charge everything to my credit card and i mean everything. I do pay it off each month though. My pay as an engineer is pretty good so I am able to live it up. I should probably take advantage of living at home and just pay as much of the loan as I can right?

 

[waffleironhead]

Originally posted by: Aznguy1872

Originally posted by: waffleironhead
pay down as much as you can while still allowing yourself to live. Get a credit card and establish credit, so when you go to buy that car you have a decent credit rating.

I do have a credit card and do charge everything to it to build credit, though you guys may think its bad that i charge everything to my credit card and i mean everything. I do pay it off each month though. My pay as an engineer is pretty good so I am able to live it up. I should probably take advantage of living at home and just pay as much of the loan as I can right?

you sound like you are doing fine. Keep paying it down, the faster the better. Use credit as a tool to get you what you need, and avoid using it for the things you want. 😉

 

[rudeguy]

Don't fall for the gas station car wash scam. They said I would get $.10 off a gallon with a car wash....sounded good to me. Turns out I paid $10 for a basic car wash and only got 11 gallons of gas.

Follow this advice and you will do well.

 

[Aznguy1872]

Originally posted by: NSFW
Don't fall for the gas station car wash scam. They said I would get $.10 off a gallon with a car wash....sounded good to me. Turns out I paid $10 for a basic car wash and only got 11 gallons of gas.

Follow this advice and you will do well.

Haha, will do 🙂

 

[Aznguy1872]

Originally posted by: waffleironhead

Originally posted by: Aznguy1872

Originally posted by: waffleironhead
pay down as much as you can while still allowing yourself to live. Get a credit card and establish credit, so when you go to buy that car you have a decent credit rating.

I do have a credit card and do charge everything to it to build credit, though you guys may think its bad that i charge everything to my credit card and i mean everything. I do pay it off each month though. My pay as an engineer is pretty good so I am able to live it up. I should probably take advantage of living at home and just pay as much of the loan as I can right?

you sound like you are doing fine. Keep paying it down, the faster the better. Use credit as a tool to get you what you need, and avoid using it for the things you want. 😉

Yeah I guess I'll keep my payments at the rate I am right now, basically 1k a month but 100 of it going to interest. Which isn't too bad I guess. Thanks for the advice waffleironhead.

 

[KillerCharlie]

What are the interest rates on the loans? After I had a federal loan refinanced the rate was something like 2%... I'm paying nothing more than the minimum for that one.

 

[Aznguy1872]

one is 6.8 and the other is 4.75 but the weird thing is that I can't consolidate my loans and they are a joint amount. This means that even though I have 2 seperate loans, I make one fixed payment and it gets allocated like 60% to the 6.75 interest one and 40% to the 4.75 interest loan. I'm losing about 85 dollars a month right now. I'm making a total of 1000 dollars a month towards it which I think is pretty good because I am still able to save a decent amount.

 

[Bignate603]

I'd pay down the loan pretty quick but I'd start stashing some cash away ASAP for your emergency fund. Get enough to survive on your own for 6 months, put it in an account and pretend it's not there. If you ever end up in a position where you have a sudden emergency (like lose your job and have to live on your own, not like your TV broke and you need a new one) you don't have to worry about the money. You're making good money now and you have the ability to save, so stash some away while you can. Many people don't have any cushion so when something goes wrong they charge it on their credit cards. They'll charge a ton during the emergency, then be buried with interest trying to pay it back which can often stretch their budgets quite thin. Your emergency fund doesn't need to be enough to live the high life for 6 months, but it should be enough to cover modest expenses for 6 months for you to live on your own. Again, once you've got the emergency fund stash it away and pretend its not there, put it in a high interest bank account or something similar and leave it.

After you've got your emergency money stashed away, you're putting into your retirement (if you have 401k matching and aren't using it you're missing free money) and you've got your loan paid down so you aren't getting killed on the interest you should start saving for what you want to do. That could be for a car, maybe a trip you want, or even a big TV. Decide what you want, save up for it, and pay cash. Once you get used to saving money you'll be amazed at how fast it can grow. You may not be able to wait for the car, but if you save up a good down payment on it and buy within your income you can get something really nice with manageable payments.

 

[Aznguy1872]

Originally posted by: Bignate603
I'd pay down the loan pretty quick but I'd start stashing some cash away ASAP for your emergency fund. Get enough to survive on your own for 6 months, put it in an account and pretend it's not there. If you ever end up in a position where you have a sudden emergency (like lose your job and have to live on your own, not like your TV broke and you need a new one) you don't have to worry about the money. You're making good money now and you have the ability to save, so stash some away while you can. Many people don't have any cushion so when something goes wrong they charge it on their credit cards. They'll charge a ton during the emergency, then be buried with interest trying to pay it back which can often stretch their budgets quite thin. Your emergency fund doesn't need to be enough to live the high life for 6 months, but it should be enough to cover modest expenses for 6 months for you to live on your own. Again, once you've got the emergency fund stash it away and pretend its not there, put it in a high interest bank account or something similar and leave it.

After you've got your emergency money stashed away, you're putting into your retirement (if you have 401k matching and aren't using it you're missing free money) and you've got your loan paid down so you aren't getting killed on the interest you should start saving for what you want to do. That could be for a car, maybe a trip you want, or even a big TV. Decide what you want, save up for it, and pay cash. Once you get used to saving money you'll be amazed at how fast it can grow. You may not be able to wait for the car, but if you save up a good down payment on it and buy within your income you can get something really nice with manageable payments.

Dang, you laid it out easily and I think I'll definately follow what you just said. Its definately realistic for me and is smart. Thanks for the advice!

 

[Xcobra]

Originally posted by: Bignate603
I'd pay down the loan pretty quick but I'd start stashing some cash away ASAP for your emergency fund. Get enough to survive on your own for 6 months, put it in an account and pretend it's not there. If you ever end up in a position where you have a sudden emergency (like lose your job and have to live on your own, not like your TV broke and you need a new one) you don't have to worry about the money. You're making good money now and you have the ability to save, so stash some away while you can. Many people don't have any cushion so when something goes wrong they charge it on their credit cards. They'll charge a ton during the emergency, then be buried with interest trying to pay it back which can often stretch their budgets quite thin. Your emergency fund doesn't need to be enough to live the high life for 6 months, but it should be enough to cover modest expenses for 6 months for you to live on your own. Again, once you've got the emergency fund stash it away and pretend its not there, put it in a high interest bank account or something similar and leave it.

After you've got your emergency money stashed away, you're putting into your retirement (if you have 401k matching and aren't using it you're missing free money) and you've got your loan paid down so you aren't getting killed on the interest you should start saving for what you want to do. That could be for a car, maybe a trip you want, or even a big TV. Decide what you want, save up for it, and pay cash. Once you get used to saving money you'll be amazed at how fast it can grow. You may not be able to wait for the car, but if you save up a good down payment on it and buy within your income you can get something really nice with manageable payments.

:thumbsup: Great advice!

 

[alkemyst]

Originally posted by: Aznguy1872 I am living at home with my parents so I don't pay for rent or food though I do give them money.

Dude...WTF do you call it then?

So seriously though, you have no debt, no real bills, just became an engineer, and paying off $18k is this complicated?

BTW a car is not an investment 99.99999999% of the time if you intend on driving it.

I don't see how someone that has a good job has any desire to stick around home, it's slowly creating another 1950's situation where households started generating two incomes only now that may be 3 or 4 incomes.

My belief is property taxes should be bases not only on value, but number of adults dwelling in an unit. The tax would be progressive as well where 3 adults would only be a minor hit, but 4 may double the entire tax basis. This would also knock 'gang houses' down a bit.