How's this for snowballing my debt!

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easye418
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How's this for snowballing my debt!

Post by easye418 »

All,

Two months ago:

Mortgage $308,950
Student Loans $65,000
Debt 1 $974.02
Debt 2 $2,982.55
Debt 3 $9,000.00
Debt 4 $1,473.00
Debt 5 $2,234.74
Debt 6 $536.00
Debt 7 $4,513.18
Debt 8 $1,000.00

Today:

Mortgage $308,950
Student Loans $65,000
Debt 1 $0
Debt 2 $0
Debt 3 $0
Debt 4 $0
Debt 5 $0
Debt 6 $0
Debt 7 $0
Debt 8 $0

Take that debt! 8-)

Now my next goal is paying off our Student Loans by next July.
When that is done, putting $17,500 in my 401k yearly and $5500 in tIRA.

Just wanted to share my accomplishment with everyone and thank you for all of the lean living tips.

Cheers! :sharebeer
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White Coat Investor
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Re: How's this for snowballing my debt!

Post by White Coat Investor »

Good job. Feels good eh?
1) Invest you must 2) Time is your friend 3) Impulse is your enemy | 4) Basic arithmetic works 5) Stick to simplicity 6) Stay the course
grettman
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Re: How's this for snowballing my debt!

Post by grettman »

At this pace you will kill that student loan in know time.

Great job. Keep it up!

Dave Ramsey would be proud of you :)

Hehehe.
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easye418
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Re: How's this for snowballing my debt!

Post by easye418 »

EmergDoc wrote:Good job. Feels good eh?
Feels great.
grettman wrote:At this pace you will kill that student loan in know time.

Great job. Keep it up!

Dave Ramsey would be proud of you :)

Hehehe.
Unforunately, that pace will slow down. Liquidated about $17k worth of Assets. I have maybe $5k-$10k Assets still to liquidate but it will take a bit longer.

I have $6-$8k from a side job coming and hopefully $2k a month to Student loans.
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runner9
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Re: How's this for snowballing my debt!

Post by runner9 »

Great job! Have to ask though, the mortgage didn't go down at all in 2 months?
terran
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Re: How's this for snowballing my debt!

Post by terran »

Not sure that counts as a snowball. More like you dropped a whole nor'easter on that debt. Well done! :D
Topic Author
easye418
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Re: How's this for snowballing my debt!

Post by easye418 »

runner9 wrote:Great job! Have to ask though, the mortgage didn't go down at all in 2 months?
I just kept it constant. It dropped a bit.
terran wrote:Not sure that counts as a snowball. More like you dropped a whole nor'easter on that debt. Well done! :D
:)
niceguy7376
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Re: How's this for snowballing my debt!

Post by niceguy7376 »

Good job.

Just for clarification, are you contributing to 401k right now?

Also, with the amount of debt you paid off in 2 months, how much was it from savings and how much from selling assets?

Also, you mentioned that after you pay off student loans, you will contribute to 401k and trad ira. Will your income be lower to be eligible for trad ira after contributing to 401k?
bloom2708
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Re: How's this for snowballing my debt!

Post by bloom2708 »

Nice work!

I assume it is even a few $ better as your mortgage and student loans should be down at least a few dollars over the two months.

If you can demolish those student loans in 1 year, you could make a serious dent in your mortgage over the next few years as well.

Seeing "debt freedom" on the horizon is a pretty good goal. I know it is not for everyone here, but having no debt gives you some great flexibility and options going forward.
randomguy
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Re: How's this for snowballing my debt!

Post by randomguy »

easye418 wrote:
EmergDoc wrote:Good job. Feels good eh?
Feels great.
grettman wrote:At this pace you will kill that student loan in know time.

Great job. Keep it up!

Dave Ramsey would be proud of you :)

Hehehe.
Unforunately, that pace will slow down. Liquidated about $17k worth of Assets. I have maybe $5k-$10k Assets still to liquidate but it will take a bit longer.

I have $6-$8k from a side job coming and hopefully $2k a month to Student loans.

So when you do a networth statement, nothing really changed? You just moved money from one place to an another.
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easye418
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Re: How's this for snowballing my debt!

Post by easye418 »

randomguy wrote:
So when you do a networth statement, nothing really changed? You just moved money from one place to an another.
Technically, yes.

These assets were from inheritance, so I never included them in a rough networth statement. Still networth negative obviously.
bloom2708 wrote:Nice work!

I assume it is even a few $ better as your mortgage and student loans should be down at least a few dollars over the two months.

If you can demolish those student loans in 1 year, you could make a serious dent in your mortgage over the next few years as well.

Seeing "debt freedom" on the horizon is a pretty good goal. I know it is not for everyone here, but having no debt gives you some great flexibility and options going forward.
Just a bit and that is the plan. I want to absolutely destroy my mortgage and student loans. I will be laying everything I have into them.

niceguy7376 wrote:Good job.

Just for clarification, are you contributing to 401k right now?

Also, with the amount of debt you paid off in 2 months, how much was it from savings and how much from selling assets?

Also, you mentioned that after you pay off student loans, you will contribute to 401k and trad ira. Will your income be lower to be eligible for trad ira after contributing to 401k?
6% me. 3% company.

All of it was from selling assets.

I believe I can. <$150K MFJ
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packet
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Re: How's this for snowballing my debt!

Post by packet »

Nice!
easye418 wrote:...When that is done, putting $17,500 in my 401k yearly and $5500 in tIRA...
Just to be sure you're aware... the max for 2015 is $18,000 ... :)

:beerCheers,
packet
First round’s on me.
niceguy7376
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Re: How's this for snowballing my debt!

Post by niceguy7376 »

easye418 wrote:
niceguy7376 wrote: Also, you mentioned that after you pay off student loans, you will contribute to 401k and trad ira. Will your income be lower to be eligible for trad ira after contributing to 401k?
I believe I can. <$150K MFJ
For TIRA, your modified AGI should be less than 98k for full benefit of deduction for tira.

http://www.irs.gov/Retirement-Plans/201 ... an-at-Work
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easye418
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Re: How's this for snowballing my debt!

Post by easye418 »

niceguy7376 wrote:
easye418 wrote:
niceguy7376 wrote: Also, you mentioned that after you pay off student loans, you will contribute to 401k and trad ira. Will your income be lower to be eligible for trad ira after contributing to 401k?
I believe I can. <$150K MFJ
For TIRA, your modified AGI should be less than 98k for full benefit of deduction for tira.

http://www.irs.gov/Retirement-Plans/201 ... an-at-Work
I will have to double check that... I am above $100k income. Thanks.
packet wrote:Nice!
easye418 wrote:...When that is done, putting $17,500 in my 401k yearly and $5500 in tIRA...
Just to be sure you're aware... the max for 2015 is $18,000 ... :)

:beerCheers,
packet
:beer
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JupiterJones
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Re: How's this for snowballing my debt!

Post by JupiterJones »

Nice job, easye!

That student loan has fear in its eyes. It knows you're comin' for it!
"Stay on target! Stay on target!"
Saving$
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Re: How's this for snowballing my debt!

Post by Saving$ »

Great job.

Please seriously consider fully funding a Roth IRA in 2015, and maybe even putting more in your 401k. Without knowing either the interest rate of the debt or how much per month of your cash flow you plan to put toward the debt (is it $65k/12 = $5.4k/month?) it is difficult to say definitively, but even if you have $4k/month to put to the student loan, you may be far better off to fully fund the Roth and 401k. If you don't, you lose that space FOREVER. So 2 months more student loan payment vs the rest of your working life tax free earnings on max Roth contribution... Think about it.
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easye418
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Re: How's this for snowballing my debt!

Post by easye418 »

Saving$ wrote:Great job.

Please seriously consider fully funding a Roth IRA in 2015, and maybe even putting more in your 401k. Without knowing either the interest rate of the debt or how much per month of your cash flow you plan to put toward the debt (is it $65k/12 = $5.4k/month?) it is difficult to say definitively, but even if you have $4k/month to put to the student loan, you may be far better off to fully fund the Roth and 401k. If you don't, you lose that space FOREVER. So 2 months more student loan payment vs the rest of your working life tax free earnings on max Roth contribution... Think about it.
I actually have $14k in a traditional IRA with Chase (will be transferring it next). My bene IRA just transfered to Vanguard today (yay!).

Currently, dual income, I'm around $115k. Should steadily go up. Can see $10-$20k bump in 2-3 years.

Should I convert to a Roth?

$5.4k is a stretch goal. Will most likely not happen unless my wife works 40 instead of 32hrs a week.

I've already put $1.8k this year to the tIRA.
KingsBench
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Re: How's this for snowballing my debt!

Post by KingsBench »

easye418 wrote: I want to absolutely destroy my mortgage and student loans. I will be laying everything I have into them.
Easye418 -
How will you destroy your loans? What will be your plan of attack? Will you divide and conquer?
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Re: How's this for snowballing my debt!

Post by abuss368 »

Nice job! Congrats on removing all that debt. I would focus on the student loans and continue to make regular mortgage loan payments.

Best.
John C. Bogle: “Simplicity is the master key to financial success."
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easye418
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Re: How's this for snowballing my debt!

Post by easye418 »

KingsBench wrote:
easye418 wrote: I want to absolutely destroy my mortgage and student loans. I will be laying everything I have into them.
Easye418 -
How will you destroy your loans? What will be your plan of attack? Will you divide and conquer?
Yup, I will most likely start with the smaller ones sub $1000 to consolidate them into a handful really quickly. Then start highest interest and work down.

All my extra money will be tossed at student loans.
abuss368 wrote:Nice job! Congrats on removing all that debt. I would focus on the student loans and continue to make regular mortgage loan payments.

Best.
Thanks. The one thing I did want to work on was an Emergency Fund. I've been using my retirement account as a parachute and I am not really comfortable with that. However, I want to focus all of my free cashflow to getting rid of all of my debts.

Is it worth hiking up the 401k or E-Fund now or focus all getting rid of the student loans?
niceguy7376
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Re: How's this for snowballing my debt!

Post by niceguy7376 »

I would make sure to max my 401k and roth ira (you might not be eligible for tax deductible trad ira) and then put extra money into loans. 401k space is use it or lose it and I dont want to lose it for having the loans off a couple of months early.
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easye418
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Re: How's this for snowballing my debt!

Post by easye418 »

niceguy7376 wrote:I would make sure to max my 401k and roth ira (you might not be eligible for tax deductible trad ira) and then put extra money into loans. 401k space is use it or lose it and I dont want to lose it for having the loans off a couple of months early.
Couple months early would be light. IF I pay off my Student Loans within 12 months, I would cut off years.

But, 401k is definitely something I am looking into. Unfortunately, my job has Mass Mutal (for some reason) and Fidelity Spartan 500 is the best choice. But I balance it in my Bene IRA.

Can we have the best of both worlds here? Since my contribution is 6% plus 3% employer, what if I doubled it to 12% plus 3% and worked towards my goal of no debt? Any other opinions on this matter?
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whatusername?
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Re: How's this for snowballing my debt!

Post by whatusername? »

easye418 wrote: Thanks. The one thing I did want to work on was an Emergency Fund. I've been using my retirement account as a parachute and I am not really comfortable with that. However, I want to focus all of my free cashflow to getting rid of all of my debts.

Is it worth hiking up the 401k or E-Fund now or focus all getting rid of the student loans?
Congratulations! What's the rate on the student loans? Presumably higher than the mortgage...but since that isn't the case for everyone I thought I'd ask.

I'd advocate working on the emergency fund first unless the student loans have some sort of outrageous rate on them. Using your retirement accounts has some significant drawbacks depending on what your emergency is, as I suspect you know from your level of discomfort.
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easye418
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Re: How's this for snowballing my debt!

Post by easye418 »

whatusername? wrote:
easye418 wrote: Thanks. The one thing I did want to work on was an Emergency Fund. I've been using my retirement account as a parachute and I am not really comfortable with that. However, I want to focus all of my free cashflow to getting rid of all of my debts.

Is it worth hiking up the 401k or E-Fund now or focus all getting rid of the student loans?
Congratulations! What's the rate on the student loans? Presumably higher than the mortgage...but since that isn't the case for everyone I thought I'd ask.

I'd advocate working on the emergency fund first unless the student loans have some sort of outrageous rate on them. Using your retirement accounts has some significant drawbacks depending on what your emergency is, as I suspect you know from your level of discomfort.
Amount Monthly Payment Rate
Student Loan 1 $4,058.47 $50.93 4.25% My Loan
Student Loan 2 $2,247.57 $27.01 3.15% My Loan
Student Loan 3 $9,204.32 $113.12 5.16% My Loan
Student Loan 4 $543.42 0 6.80% My Loan
Student Loan 5 $536.24 0 6.80% My Loan


Student Loan 6 $7,213.63 0 6.80% Her Loan
Student Loan 7 $7,549.26 0 6.80% Her Loan
Student Loan 8 $3,649.39 0 6.80% Her Loan
Student Loan 9 $2,794.81 0 4.50% Her Loan
Student Loan 10 $3,218.01 0 3.40% Her Loan
Student Loan 11 $1,229.63 0 6.80% Her Loan
Student Loan 12 $3,526.60 0 6.80% Her Loan
Student Loan 13 $3,257.13 0 6.80% Her Loan
Student Loan 14 $5,500.00 0 4.66% Her Loan
Student Loan 15 $7,000.00 0 4.66% Her Loan
Student Loan 16 TBD 0 4.66% Her Loan

*Student Loan 16 is the final one. No additional loans....EVER.

Total $61,528.48
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grap0013
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Re: How's this for snowballing my debt!

Post by grap0013 »

terran wrote:Not sure that counts as a snowball. More like you dropped a whole nor'easter on that debt. Well done! :D
+1

That is a terrible snowball analogy over a 2 month period unless you were making daily payments and incrementally stacked them. :-)

Seriously though, nice job OP!
There are no guarantees, only probabilities.
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whatusername?
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Re: How's this for snowballing my debt!

Post by whatusername? »

easye418 wrote:
whatusername? wrote:
easye418 wrote: Thanks. The one thing I did want to work on was an Emergency Fund. I've been using my retirement account as a parachute and I am not really comfortable with that. However, I want to focus all of my free cashflow to getting rid of all of my debts.

Is it worth hiking up the 401k or E-Fund now or focus all getting rid of the student loans?
Congratulations! What's the rate on the student loans? Presumably higher than the mortgage...but since that isn't the case for everyone I thought I'd ask.

I'd advocate working on the emergency fund first unless the student loans have some sort of outrageous rate on them. Using your retirement accounts has some significant drawbacks depending on what your emergency is, as I suspect you know from your level of discomfort.
Amount Monthly Payment Rate
Student Loan 1 $4,058.47 $50.93 4.25% My Loan
Student Loan 2 $2,247.57 $27.01 3.15% My Loan
Student Loan 3 $9,204.32 $113.12 5.16% My Loan
Student Loan 4 $543.42 0 6.80% My Loan
Student Loan 5 $536.24 0 6.80% My Loan


Student Loan 6 $7,213.63 0 6.80% Her Loan
Student Loan 7 $7,549.26 0 6.80% Her Loan
Student Loan 8 $3,649.39 0 6.80% Her Loan
Student Loan 9 $2,794.81 0 4.50% Her Loan
Student Loan 10 $3,218.01 0 3.40% Her Loan
Student Loan 11 $1,229.63 0 6.80% Her Loan
Student Loan 12 $3,526.60 0 6.80% Her Loan
Student Loan 13 $3,257.13 0 6.80% Her Loan
Student Loan 14 $5,500.00 0 4.66% Her Loan
Student Loan 15 $7,000.00 0 4.66% Her Loan
Student Loan 16 TBD 0 4.66% Her Loan

*Student Loan 16 is the final one. No additional loans....EVER.

Total $61,528.48
If I were you, I'd split the difference: half of savings to your emergency fund, half to student loans, until you get your EF where you want it to be. YMMV, and good luck!
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Traveller
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Re: How's this for snowballing my debt!

Post by Traveller »

I think the term should be "Cannonball", not "Snowball".

Awesome work!!
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easye418
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Re: How's this for snowballing my debt!

Post by easye418 »

grap0013 wrote:
terran wrote:Not sure that counts as a snowball. More like you dropped a whole nor'easter on that debt. Well done! :D
+1

That is a terrible snowball analogy over a 2 month period unless you were making daily payments and incrementally stacked them. :-)

Seriously though, nice job OP!
:beer
whatusername? wrote:
If I were you, I'd split the difference: half of savings to your emergency fund, half to student loans, until you get your EF where you want it to be. YMMV, and good luck!
Doing some rough math and starting with $0 balance on all credit cards, I will be tracking every single dollar. I calculate I should bring home $7,400 cash a month, with being able to pay $3,500 to Student Loans.

Granted, this does not take into additional investing.

Is it worth focusing on 18-20 months of paying Student Loans off for good without increasing my 401k?
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celia
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Re: How's this for snowballing my debt!

Post by celia »

More importantly, what to you plan to do to stay out of further debt?

hint: Build up an emergency fund of 6-12 months of living expenses? Don't put more on the credit card than you can pay off at the end of the billing cycle? Don't sign for any loans, especially co-sign for others?

If you tell us what your plan is, you're more likely to follow it as it will become a "public" record and we can "hold you" to it! :happy
A dollar in Roth is worth more than a dollar in a taxable account. A dollar in taxable is worth more than a dollar in a tax-deferred account.
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easye418
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Re: How's this for snowballing my debt!

Post by easye418 »

celia wrote:More importantly, what to you plan to do to stay out of further debt?

hint: Build up an emergency fund of 6-12 months of living expenses? Don't put more on the credit card than you can pay off at the end of the billing cycle? Don't sign for any loans, especially co-sign for others?

If you tell us what your plan is, you're more likely to follow it as it will become a "public" record and we can "hold you" to it! :happy

12 month E fund would be $42k. I would be happy with that.

Credit cards are paid off full each month. The last year was a whirlwind of events for us. (moved cross country, 2 new jobs, wedding, honeymoon, and first home)

Only loans I take out are for wife's student loans and last one is coming up.

If by 27, I own two cars, paid off three degrees (BS of Fin, MBA and BSN), paid wedding and honeymoon myself, and have $150k in retirement account, I'll be pretty happy.
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whatusername?
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Re: How's this for snowballing my debt!

Post by whatusername? »

easye418 wrote:I calculate I should bring home $7,400 cash a month, with being able to pay $3,500 to Student Loans.

Granted, this does not take into additional investing.

Is it worth focusing on 18-20 months of paying Student Loans off for good without increasing my 401k?
Definitely contribute to your 401k up to any match - that is a risk-free guaranteed 50% or 100% rate of return instead of the 6% or so on the highest of the student loans. Beyond that is up to you, but I'd save for retirement since the interest rates on the student loans aren't obscene.

If I were in your position, I'd divide the $3500/mo as follows: $1250/mo to the 401k, $1250/mo to the student loans, and the remaining $1000/mo to the emergency fund until it reaches your desired level.

I understand the impatience that comes with wanting to pay off all debt but retirement savings - both in time and tax advantaged space - are opportunities you won't get back. You have to balance your priorities, but the future should be a pretty big priority too.
jnet2000
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Re: How's this for snowballing my debt!

Post by jnet2000 »

Great job! There is immense satisfaction and joy from paying off unwanted debt. Congrats. I love being debt free and don't regret it one bit. You'll wipe out all your debit in no time and have plenty of time to max out retirement later. I am definitely on the Dave Ramsey camp when it comes to debt elimination.
"You really don't need leverage in this world much. If you're smart, you're going to make a lot of money without borrowing" Warren Buffet
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easye418
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Re: How's this for snowballing my debt!

Post by easye418 »

whatusername? wrote:
easye418 wrote:I calculate I should bring home $7,400 cash a month, with being able to pay $3,500 to Student Loans.

Granted, this does not take into additional investing.

Is it worth focusing on 18-20 months of paying Student Loans off for good without increasing my 401k?
Definitely contribute to your 401k up to any match - that is a risk-free guaranteed 50% or 100% rate of return instead of the 6% or so on the highest of the student loans. Beyond that is up to you, but I'd save for retirement since the interest rates on the student loans aren't obscene.

If I were in your position, I'd divide the $3500/mo as follows: $1250/mo to the 401k, $1250/mo to the student loans, and the remaining $1000/mo to the emergency fund until it reaches your desired level.

I understand the impatience that comes with wanting to pay off all debt but retirement savings - both in time and tax advantaged space - are opportunities you won't get back. You have to balance your priorities, but the future should be a pretty big priority too.
Looks like spare cash will be $3,205 so round down for missing something or under estimating.

$3,000 a month to spare.
jnet2000 wrote:Great job! There is immense satisfaction and joy from paying off unwanted debt. Congrats. I love being debt free and don't regret it one bit. You'll wipe out all your debit in no time and have plenty of time to max out retirement later. I am definitely on the Dave Ramsey camp when it comes to debt elimination.
:beer
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easye418
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Re: How's this for snowballing my debt!

Post by easye418 »

whatusername? wrote:
easye418 wrote:I calculate I should bring home $7,400 cash a month, with being able to pay $3,500 to Student Loans.

Granted, this does not take into additional investing.

Is it worth focusing on 18-20 months of paying Student Loans off for good without increasing my 401k?
Definitely contribute to your 401k up to any match - that is a risk-free guaranteed 50% or 100% rate of return instead of the 6% or so on the highest of the student loans. Beyond that is up to you, but I'd save for retirement since the interest rates on the student loans aren't obscene.

If I were in your position, I'd divide the $3500/mo as follows: $1250/mo to the 401k, $1250/mo to the student loans, and the remaining $1000/mo to the emergency fund until it reaches your desired level.

I understand the impatience that comes with wanting to pay off all debt but retirement savings - both in time and tax advantaged space - are opportunities you won't get back. You have to balance your priorities, but the future should be a pretty big priority too.
I definitely see the merit in increasing the 401k, but I don't think all the way to $1250.

If I increase my contributions from 6% to 15%, the true effect of my check will go down $263 or $526 a month. That means I will be banking $875 a month instead of $350 for a yearly (with employer 3%) ~$12,000 a year 401k. I will readjust as needed, but a good improvement from what I was doing before.

$3000-$526 = $2474.

$36,709.62 in 5.16%-6.8% interest rate student loans. Give me a payoff of 24 months, thats ~$1,500 a month to Student Loans.

That leaves $974 dollars to put towards an E-Fund/ Principal Mortgage Payment... This is the tricky one.

I can recast my mortgage if I save up say $30k to lighten the burden on my mortgage payment OR I can pay down principal in order to get rid of my PMI.

Thoughts?
JonnyP
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Re: How's this for snowballing my debt!

Post by JonnyP »

Laddering or avalanche would be better.
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easye418
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Re: How's this for snowballing my debt!

Post by easye418 »

whatusername? wrote:
easye418 wrote:I calculate I should bring home $7,400 cash a month, with being able to pay $3,500 to Student Loans.

Granted, this does not take into additional investing.

Is it worth focusing on 18-20 months of paying Student Loans off for good without increasing my 401k?
Definitely contribute to your 401k up to any match - that is a risk-free guaranteed 50% or 100% rate of return instead of the 6% or so on the highest of the student loans. Beyond that is up to you, but I'd save for retirement since the interest rates on the student loans aren't obscene.

If I were in your position, I'd divide the $3500/mo as follows: $1250/mo to the 401k, $1250/mo to the student loans, and the remaining $1000/mo to the emergency fund until it reaches your desired level.

I understand the impatience that comes with wanting to pay off all debt but retirement savings - both in time and tax advantaged space - are opportunities you won't get back. You have to balance your priorities, but the future should be a pretty big priority too.
Just to update it:

Decided to increase 401k from 6% to 15%. My take home dropped to $1,901 x 2 = $3,802.

My Net Pay = $3,802
Wife's Net Pay = $2,600
(sometimes $3,000 as she works more hours, $1,000 put aside for estimated taxes monthly, I think this is nuts $47k yearly, $12k taxes????)
Bills: $676 (Water,gas/elec,internet,tv,cell, auto insurance, gym)
Mortgage: $2550 ($1,948 Principal plus Escrow, $600 Prop Tax)

= $3,176 available cash flow and let's just round down and put a $176 cushion. $3,000 available.

E Fund = $1,000 per month = $20,000 (6 month expenses) = 20 months. (Do I really need more than $20k put aside?)
$65k Student Loans / $2,000 = 20 months @ 2,000, 8.33 months @3,000

Just shy of 2.5 years to pay off Student Loans and 1.5 years for E-Fund. Not including $7k-$10k dump of side income and $7k+ tax refund.

God, this site is so valuable beyond words.
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whatusername?
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Re: How's this for snowballing my debt!

Post by whatusername? »

easye418 wrote:Just to update it:

Decided to increase 401k from 6% to 15%. My take home dropped to $1,901 x 2 = $3,802.

E Fund = $1,000 per month = $20,000 (6 month expenses) = 20 months. (Do I really need more than $20k put aside?)
$65k Student Loans / $2,000 = 20 months @ 2,000, 8.33 months @3,000

Just shy of 2.5 years to pay off Student Loans and 1.5 years for E-Fund. Not including $7k-$10k dump of side income and $7k+ tax refund.
Well done! :beer
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bertie wooster
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Re: How's this for snowballing my debt!

Post by bertie wooster »

Congrats!

Agree with other folks about the 401k recommendations. Keep it up!
nanoanalyzer
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Re: How's this for snowballing my debt!

Post by nanoanalyzer »

easye418 wrote: Just to update it:

Decided to increase 401k from 6% to 15%. My take home dropped to $1,901 x 2 = $3,802.

...

E Fund = $1,000 per month = $20,000 (6 month expenses) = 20 months. (Do I really need more than $20k put aside?)
$65k Student Loans / $2,000 = 20 months @ 2,000, 8.33 months @3,000
You've come a long way in 2 weeks. It took me much longer to realize how important tax-advantaged space is with high income potential.

Now that you have that budget figured out, how about considering a student loan refi? 5 year variable rates at SoFi are so attractive, you may find you don't want to pay any faster than the minimum!
"If you think stocks are like physics, you believe there must be smart people who can measure exactly where the Dow Jones Industrial Average will be in five months." -Morgan Housel
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easye418
Posts: 361
Joined: Wed Apr 22, 2015 8:04 am

Re: How's this for snowballing my debt!

Post by easye418 »

nanoanalyzer wrote:
easye418 wrote: Just to update it:

Decided to increase 401k from 6% to 15%. My take home dropped to $1,901 x 2 = $3,802.

...

E Fund = $1,000 per month = $20,000 (6 month expenses) = 20 months. (Do I really need more than $20k put aside?)
$65k Student Loans / $2,000 = 20 months @ 2,000, 8.33 months @3,000
You've come a long way in 2 weeks. It took me much longer to realize how important tax-advantaged space is with high income potential.

Now that you have that budget figured out, how about considering a student loan refi? 5 year variable rates at SoFi are so attractive, you may find you don't want to pay any faster than the minimum!
I wouldn't want to get hosed if interest rates skyrocket. However, I would have nearly a 4% threshold before I am losing money on the refi. 1.9% on $30k of high interest loans.

Hmmmm... that could take YEARS to get that high, might be something to look at.
nanoanalyzer
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Re: How's this for snowballing my debt!

Post by nanoanalyzer »

easye418 wrote:
I wouldn't want to get hosed if interest rates skyrocket. However, I would have nearly a 4% threshold before I am losing money on the refi. 1.9% on $30k of high interest loans.

Hmmmm... that could take YEARS to get that high, might be something to look at.
You may also find solace in the ability to significantly accelerate payments, if needed, or if rates should increase. With a 20 month plan right now, that should be no problem for you.
"If you think stocks are like physics, you believe there must be smart people who can measure exactly where the Dow Jones Industrial Average will be in five months." -Morgan Housel
Topic Author
easye418
Posts: 361
Joined: Wed Apr 22, 2015 8:04 am

Re: How's this for snowballing my debt!

Post by easye418 »

nanoanalyzer wrote:
easye418 wrote:
I wouldn't want to get hosed if interest rates skyrocket. However, I would have nearly a 4% threshold before I am losing money on the refi. 1.9% on $30k of high interest loans.

Hmmmm... that could take YEARS to get that high, might be something to look at.
You may also find solace in the ability to significantly accelerate payments, if needed, or if rates should increase. With a 20 month plan right now, that should be no problem for you.
I am also looking at options to recast my mortgage by putting $20k down, by the time I probably got the $20k, it would be down to $300k, so I can get my mortgage to $280k with 28 years left @ 4.125% fixed. Need a mortgage person to help me with this one.
Saving$
Posts: 2510
Joined: Sat Nov 05, 2011 8:33 pm

Re: How's this for snowballing my debt!

Post by Saving$ »

easye418 wrote: Just to update it:

Decided to increase 401k from 6% to 15%. My take home dropped to $1,901 x 2 = $3,802.

My Net Pay = $3,802
Wife's Net Pay = $2,600
(sometimes $3,000 as she works more hours, $1,000 put aside for estimated taxes monthly, I think this is nuts $47k yearly, $12k taxes????)
Bills: $676 (Water,gas/elec,internet,tv,cell, auto insurance, gym)
Mortgage: $2550 ($1,948 Principal plus Escrow, $600 Prop Tax)

= $3,176 available cash flow and let's just round down and put a $176 cushion. $3,000 available.

E Fund = $1,000 per month = $20,000 (6 month expenses) = 20 months. (Do I really need more than $20k put aside?)
$65k Student Loans / $2,000 = 20 months @ 2,000, 8.33 months @3,000

Just shy of 2.5 years to pay off Student Loans and 1.5 years for E-Fund. Not including $7k-$10k dump of side income and $7k+ tax refund.

God, this site is so valuable beyond words.
Good job. Now that you have decided what to do, why not just hedge your bets on that emergency fund of $12k. Put $5.5k for each of you into a Roth IRA. If you need it for an emergency, you can take out your contributions with no penalty. If you end up not needing it, you have just claimed Roth IRA space that will be gone forever if left unclaimed.
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