Log In Sign Up

Advice - Student loans, debt pay off order

Forum: Financial Planning and Budgeting


Welcome to the JustMommies Message Boards.

We pride ourselves on having the friendliest and most welcoming forums for moms and moms to be! Please take a moment and register for free so you can be a part of our growing community of mothers. If you have any problems registering please drop an email to [email protected].

Our community is moderated by our moderation team so you won't see spam or offensive messages posted on our forums. Each of our message boards is hosted by JustMommies hosts, whose names are listed at the top each board. We hope you find our message boards friendly, helpful, and fun to be on!

Reply Post New Topic
  Subscribe To Financial Planning and Budgeting LinkBack Topic Tools Search this Topic Display Modes
April 27th, 2009, 09:20 AM
Momofapeanut's Avatar Platinum Supermommy
Join Date: May 2007
Posts: 2,715

I am looking for some advice about the order in which we should focus on paying off our debt and I have lurked on this board in the past to come up with ideas on how to do all the things in life we would like to do and always keep our heads well above water. But this economic climate makes me very nervous. I feel as if I cannot predict which path would be the best for us to go!

My husband has 2 different student loans. One is at 4.5% and is around 20k. The second is Department of Education, also 4.5% and 5k. He recently started taking courses and both loan companies (without our knowledge or permission) placed the loans in deferment. We had this on automatic payment (them pulling from our bank account). Now, the 5k loan earns no interest while deferred - GREAT! the 20k does, but it's very low! In fact, this year we didn't even reach the total amount of interest we could claim on our taxes. These had been at 7% for years!

So! My question is, how should we go about paying these down over this period. Our income is not changing. We had payed 226/month on the big one and 50/month on the little one. I am looking to get these paid off as soon as possible. We have a large bill that will be paid off as of June that was 500/month or more. So I will definitely have extra money to put towards these. These are variable rates.

Should I structure to pay off the 5k with full amounts that we can afford for the duration and let the 20k sit until the 5k is gone? Or should I pay interest earned on the 20k? The 5k is deferred until 2010 now, so should I structure payments to pay off before the deferment is up and then pay the other max I can on the 20k???

Thanks for your help in advance!
Reply With Quote
April 27th, 2009, 01:12 PM
SamuelsMommy's Avatar Platinum Supermommy
Join Date: Nov 2006
Location: Indiana
Posts: 16,541
I would figure out how much you need to pay on the 5k each month to get it paid off just before it comes out of deferrment and anything leftover goes to the other one and everything after the 5k is gone.

Reply With Quote
April 27th, 2009, 08:58 PM
C&K'sMama's Avatar Platinum Supermommy
Join Date: Sep 2008
Posts: 6,150
I'm currently reading "Total Money Makeover" by Dave Ramsey (if you don't have the time start reading at page 102 and the next couple chapters will outline how and why).

But he says in order for you to feel it and be succesful, ignore the intrest rate and snowball your payments in order of your least expensive bill to your most... That means

pay minimum payments on the two loans and use the rest of your money to pay off your big bill (the one that will be paid off in june). When that is paid off take every dime you're paying on that bill a month towards your 5K loan, while still making minimim payments on the other loan. When that's paid off you can take all that money and put it towards the 20K loan.

"Disability is not a brave struggle or ‘courage in the face of adversity.’ Disability is an art. It’s an ingenious way to live."
Reply With Quote

Topic Tools Search this Topic
Search this Topic:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off

All times are GMT -7. The time now is 01:12 PM.

Powered by vBulletin® Version 3.8.9
Copyright ©2000 - 2017, vBulletin Solutions, Inc.
Search Engine Optimization by vBSEO 3.6.0