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September 10, 2013


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I would first focus on paying off the student loan. You seem to be a very motivated person and as the balance declines, I suspect you will do everything possible to knock it out very quickly and should have it done in less than a year depending on your bonus and side work. From there, you should have great cash flow that will allow you to build up a 6 month emergency account. After that, max out your retirement and you are set.

I hope the boy friend is on the same page as you financially. If he's not that could be a problem. You seem to have it all together.

BY makes a good point about the ebbs and flows of most people's incomes throughout their lifetime. When I was younger I always assumed it was a constant upward trajectory but now I know that is often not the case. People assuming that they will always make more next year is what often gets them into debt... they can stretch a little now because later "it will be afforable". Not a smart assumption and a good thing to recognize at an early age.

Sounds like your on a good track BY. Does your company not offer a 401K plan? If they do, I would start investing there and stop investing in the brokerage account until you are maxing out your tax advantaged options. I think an emergency fund of 6 months of EXPENSES (not income)should be all you need in your E-fund. That would be about $20k then any excess should go into loan repayment and retirement savings. If you have a 401k match, max that our first, then apply funds to paying off your student loan, any additional monies can then go towards filling up your 401k and/or IRA. You might want to consider some some Roth (after-tax) contributions and traditional (before-tax) contributions.

Keep it up!

Just out of curiosity, what is your level of education? Are your loans from graduate or undergrad education? I've got a similar amount in loans from undergraduate but at way lower interest rates so that's what sparked my curiosity.

Also, I'm curious what your side hustle is?

I'd boost your emergency fund a bit--maybe to $10-$12k--and then attack those student loans with a vengeance. 7.75% in non-deductible interest expense is a lot! But you're right: retirement saving is important too, and the sooner you build assets, the easier it'll be to save a sizable retirement nest egg.

If I were you I'd put my budget into 'debt pay off mode,' meaning keep spending tight until the student loan is retired. Develop a budget that includes the maximum IRA contribution. (Might be simplest to decide you'll take the contribution from your annual bonus.) With your monthly surplus, first build your emergency fund a bit. When that's done, devote all of the surplus to student loan repayment. You'll knock that off pretty quick, and then you can start saving more in your non-retirement investment account.

Good luck!

I tend to hedge on paying off low interest loans. Your student loans are unfortunately rather high interest compared to today's rates. With the current balance you would be paying over $1500 per year in just interest. Any money you put in cash will get you close to zero.

I would pay those student loans down as fast as possible. Between your cash and your investment account you have 15K of ready cash if you need it.

Your first priority should be to pay off your student loans. I know it's not palatable but the smartest thing you could do is to pay them off at about $1000/month. It's not easy to earn 7.75% interest on an investment without taking a lot of risk. Just "Bite the Bullet" and do it - you won't regret it.

I'd contribute up to the match on your 401k plan (assuming there is a plan with a match) and then put extra money into paying down the student loans. Between your cash and investments yu've got $15k total there and thats a decent emergency fund.

You could also move the investment money from your TD ameritrade account into a Roth IRA over a couple years. That will shelter future gains and you can always pull out the principal if needed.

You sound very grounded. I am so glad you were able to learn lessons from your family of origin. So many people continue negative patterns based on what they observe in childhood. I really wish you well.

I would add between 2K and 4K to your emergency fund for now. Then I would throw everything you have and knock off those student loans. They are a monkey on your back, frankly. They are high interest, relatively speaking, and they are obligations that you can never every discharge until you pay them off. So live on an old sofa for a few months and savor the freedom when you send in that last payment.

I am in a very similar situation to you (28yo single female making a little less, and renting) and have struggled with the same question! It took me a while but I have finally figured out what feels right to me. I focus on retirement and cash savings first so that I am prepared for the future and for any now emergencies, and pay a little extra on the student loans. Yes, if I wanted to right now I could pay off my whole student loan balance. However, I would NOT feel comfortable without the cash buffer. So at the end of the day, what is most important to you? If you feel comfortable with less of a cash buffer, go ahead and pay off the loans ASAP and then build back up your cash while adding more to retirement. Based on your bio, it looks like you might feel better with a larger cash cushion. But that is just my opinion. As they always say, personal finance is personal. Plus if you start one plan of attack and decide to change it, that's fine too! Good luck!

I am so thankful for all of your responses! This has been a great experience to get other people's thoughts/feedback on what my best financial moves might be. Like I said, I have never really talked to anyone (other than my boyfriend) about finances and this has been a true blessing to get others' responses. Thank you all for taking the time to respond.:)

In response to JB - my student loans are from my Master's. I was fortunate enough to have an athletic scholarship for my undergrad but took out a decent amount for my Master's - don't regret it one bit, but as Suze put it best - it's kind of a "monkey on my back" some days.

I am leaning toward boosting my E-fund to $20k (LHR - thank you, you are right 6 months of expenses would only be 20k instead of $30k so that goal is probably a bit unnecessary) and as Rachel put it, I really wouldn't feel comfortable without the cash buffer and will THEN probably split increasing my retirement with paying off my student loans. At the point that I am close to owing less than $10k, I may pay them all off if I would STILL have the $20k savings in the bank at that point.


At 7.5%, I would pay off those right away. I would think that would ease your financial stresses a bit too, having less money owed! I know paying down debts is a big help with the stresses!

I agree mostly with LHRs comments. But I would save 10-15K in a emergency fund in case you loose your job of have a change. Then contribute to a 401k up to the match. If not, put in at least 5%. I don't think you are saving enough for retirement. Then I would go after the student loans with Cheetah speed to quote Dave Ramsey.

My husband and I have a paid off house and still use coupons. I'm assuming you are paying PMI and have an escrow. Those would be the next things to go if you have those options. We have always been our own escrow which doubles partially as the emergency fund. We refinanced from a 30 year to a 15 year as soon as we could and then we just killed it.

It looks like you have quite a bit of discretionary income. I'm not sure if the above budget is what you personally use or if it's more generalized for our sake, but I would suggest creating a budget where "every dollar has a name" - ie, instead of $300 for misc/fun money, spell out exactly how you'll use it - $50 clothes, $100 vacation, etc. etc.

I would also recommend paying off your student loans asap - you make enough money, and have enough undesignated expenses, that you could pay off the loan quite quickly, and after it's paid, have even more money each month to further your financial situation however you please.

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