Refinance Student Loans before buying a house? [Help prioritizing finances]

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erebusxc47
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Refinance Student Loans before buying a house? [Help prioritizing finances]

Post by erebusxc47 »

[Additional situation below. --admin LadyGeek]

Spouse and I are looking to buy a house within the next two years, with the earliest possible date being in June 2021. We ran up some credit cards while both in Grad school and have made it a priority to pay it all down - the last payment will go out 12/15/2020 at which point the only credit card "debt" will be on our everyday card which we always pay in full.

We both have student loans - mine were refinanced a year ago to a private company and hers are still federal. Given our house buying timeframe and our recently improved credit status, should we look into refinancing my loans again and hers for the first time? Main motivation here is that I think interest rates have dropped considerably over the past 12 months and even if not, we might be able to take advantage of our improved credit status [both FICO scores are simulated to be 800+ after the CC debt is paid off]. Concern would be credit inquiries impacting our scores. Details below:

Location: Charleston, SC - considering move to Nashville, TN for house purchase [we both lived in Nashville for years, have family there, and anticipate staying there for a long time - obviously would need to find stable jobs before the move, but don't think income should vary much from here to there].

Total Income:
Me: ~$150k [$120K base + $30K bonus]. I'm a consultant so should continue to see income growth over the next few years.
Her: ~$150k - $180K [dentist with variable comp, so hard to pin point exact income - likely to increase as her skills improve]
Total: $300k - $330k

Student Loans:
Me - 100% private [~$146K @ 5.109% = ~$1700/month through December 2029]
Her - 100% Federal [~$73K @ average rate of 5.51% = ~$820/month through December 2030 - currently at 0% due to Corona and not paying while we prioritize CC debt - plan to resume paying in January 2021]

Any student loan refi's would either 1) reduce the term date and pay about the same per month or 2) keep a similar term date and deploy "saved" money towards other goals [like a downpayment or more towards retirement accounts].

In the same vein, we owe about $22k [@3.99% - ~$420/month with end of term in Aug 2025] on her 2019 Toyota RAV4 that we plan to keep for a long time. Should we attempt to refinance that? Not sure if we can go much lower on a refi there.

Note: We are monitoring the student loan foregiveness plan put forth by the incoming administration. Biden's current plan suggest $10K per person, although other Democrats are suggesting upwards of $50k/person. Details are a bit vague on whether private loans will be included and if there is an income cap [2019 total income was $100k due to both of us only working part of the year] - obviously would want to take advantage of any foregiveness if possible.
tashnewbie
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Re: Refinance Student Loans before buying a house?

Post by tashnewbie »

You don't say anything about your ages or current retirement savings. I think in general, I'd put just enough into workplace plans, such as 401k, to capture the full employer match.

After that, I'd be aggressively tackling debt paydown. Definitely look into another refinance for him and a first for her (at least after the 0% interest period is over). I probably wouldn't deploy refinance "savings" into anything other than paying the SLs faster.

I don't know if I'd be worried about buying a house right now or even within the next 2 years, especially if you're moving to a new city. I'd rent for a while.
katrid11
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Re: Refinance Student Loans before buying a house?

Post by katrid11 »

Your best bet
1 - refinance the loans
2 - pay off the car loan ASAP
3 - start paying off student loans once the car loan is gone.

Not sure what your spending habits look like but a couple pulling $300k/yr gross is likely in the $19k/mth net income. If so, then try to live on $4-5k/mth and put $12-15k into the car loan then the student loans.

Is that doable - yes. But you have to live like a poor college student for a year to make a real dent. I would sooner do that pre-kids than still have loans with a mortgage, daycare, kids, and retirement and college savings all in the mix.

Think about it - if you can take 2021 and get rid of $144-160k of debt would it be worth it? You could wipe out the car loan and likely all of your student loans leaving only her loans left. Keep going into 2022 and you could be debt free by May/June 2022. Then even if you have moved and renting, you can save up a 20% down payment on a $400k home in a matter of 5 months. Want a $600k home - buy spring 2023 with likely $150k in your pocket just for the downpayment. Then drop a clear $6-8k/mth into retirement.

OR you can spend most of your cash every month and refinance loans and look to buy a $400k home sooner and hope that all the payments work out every month.
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Re: Refinance Student Loans before buying a house?

Post by Nate79 »

You won't like my answer but you are significantly and deeply in debt, basically already own a house call Student Loans + car debt. I would pay off all your debt before saving up for a down payment on a house. But if you want to go the risky route by going even more into debt by buying a house while deep in debt, good luck.

Discussion about future legislation is off limits on bogleheads so won't comment on that part.
Last edited by Nate79 on Tue Nov 17, 2020 3:32 pm, edited 1 time in total.
hightower
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Re: Refinance Student Loans before buying a house?

Post by hightower »

erebusxc47 wrote: Tue Nov 17, 2020 11:40 am Spouse and I are looking to buy a house within the next two years, with the earliest possible date being in June 2021. We ran up some credit cards while both in Grad school and have made it a priority to pay it all down - the last payment will go out 12/15/2020 at which point the only credit card "debt" will be on our everyday card which we always pay in full.

We both have student loans - mine were refinanced a year ago to a private company and hers are still federal. Given our house buying timeframe and our recently improved credit status, should we look into refinancing my loans again and hers for the first time? Main motivation here is that I think interest rates have dropped considerably over the past 12 months and even if not, we might be able to take advantage of our improved credit status [both FICO scores are simulated to be 800+ after the CC debt is paid off]. Concern would be credit inquiries impacting our scores. Details below:

Location: Charleston, SC - considering move to Nashville, TN for house purchase [we both lived in Nashville for years, have family there, and anticipate staying there for a long time - obviously would need to find stable jobs before the move, but don't think income should vary much from here to there].

Total Income:
Me: ~$150k [$120K base + $30K bonus]. I'm a consultant so should continue to see income growth over the next few years.
Her: ~$150k - $180K [dentist with variable comp, so hard to pin point exact income - likely to increase as her skills improve]
Total: $300k - $330k

Student Loans:
Me - 100% private [~$146K @ 5.109% = ~$1700/month through December 2029]
Her - 100% Federal [~$73K @ average rate of 5.51% = ~$820/month through December 2030 - currently at 0% due to Corona and not paying while we prioritize CC debt - plan to resume paying in January 2021]

Any student loan refi's would either 1) reduce the term date and pay about the same per month or 2) keep a similar term date and deploy "saved" money towards other goals [like a downpayment or more towards retirement accounts].

In the same vein, we owe about $22k [@3.99% - ~$420/month with end of term in Aug 2025] on her 2019 Toyota RAV4 that we plan to keep for a long time. Should we attempt to refinance that? Not sure if we can go much lower on a refi there.

Note: We are monitoring the student loan foregiveness plan put forth by the incoming administration. Biden's current plan suggest $10K per person, although other Democrats are suggesting upwards of $50k/person. Details are a bit vague on whether private loans will be included and if there is an income cap [2019 total income was $100k due to both of us only working part of the year] - obviously would want to take advantage of any foregiveness if possible.
I'm sure others have already said the same, but I'll say it again. First, pay off all your credit card, auto, and student loan debt. Then, save up a 20% down payment. Then happy home shopping. You likely won't do this so though. BUT, if you do, you will learn a valuable lesson and end up having a much less stressful home shopping experience when it comes time to buy.
campy2010
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Re: Refinance Student Loans before buying a house?

Post by campy2010 »

I wouldn't refinance the federal ones until the COVID 0% interest rate grace period ends. For the private loans, refinance as often as is allowed.
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Re: Refinance Student Loans before buying a house?

Post by LadyGeek »

erebusxc47 wrote: Tue Nov 17, 2020 11:40 am Note: We are monitoring the student loan foregiveness plan put forth by the incoming administration. Biden's current plan suggest $10K per person, although other Democrats are suggesting upwards of $50k/person. Details are a bit vague on whether private loans will be included and if there is an income cap [2019 total income was $100k due to both of us only working part of the year] - obviously would want to take advantage of any foregiveness if possible.
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Brianmcg321
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Re: Refinance Student Loans before buying a house?

Post by Brianmcg321 »

I wouldn't even think of buying a house with the amount of debt you have. You are asking for a life of financial difficulties.

Rent something cheap. Pay off your loans, then save up and buy a house. With yalls income it should only take a couple of years.
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Topic Author
erebusxc47
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Re: Refinance Student Loans before buying a house?

Post by erebusxc47 »

For age and retirement:

Me: 30
Her: 29

We have about $4k in a 401k. She had a pre-grad school job for about 9 months before 4 years of dental (she got a master's right out of college) - so all savings went straight to cash so she could have some flexibilty during Dental school. For me, I made the absolute worst decision ever and pulled out $20K of my 401k to help pay for school [long story, but what's done is done - and is one reason I have been educating myself on personal finance so I never make CC debt or pulling out of 401ks mistake again.]

Her current employers do not offer any 401k. My employer does a 3% salary contribution each pay period [$120K * 3% / 12 months = $300 into 401k per month]. That 3% is 100% vested and does not require me to contribute a cent for matching. In addition, I get another 1.5% of my salary [$1,800 per year] in a one time 401k contribution that vests over 4-5 years through a profit share agreement. Since both are automatic regardless of my personal contribution, I have opted to not contribute anything this year and focused it all on paying down CC debt.

I also contribute the max $7.1K to an HSA, but we've nearly depleted that with some unexpected, but needed, medical expenses this year.

Going forward, assuming she is not going to have access to a 401k, the plan would be to max out my 401k [~$19K/year], max out our HSA [$7.1K/year], and then pursue backdoor roths each [$6k/each] for a yearly "retirement" savings of ~$38k. Since we are in the 24% to 32% marginal income tax bracket, my 401k and our HSA would save us about $6k - $8K/year in taxes.

I *think* the additonal $6k - $8k tax savings per year, plus whatever investment benefit [hard to compare an expected, non guaranteed return for retirement investments] would outweigh a guaranteed return of 5% or so [Student Loan rate]. Later in life as cash flow improves, we would pursue mega backdoors and hopefully be able to do a 401k for her [and her additional $19K in a 401k would yield another $4K-$6k per year in tax savings]. I'm open to modifying that approach though.
flyfishers83
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Re: Refinance Student Loans before buying a house?

Post by flyfishers83 »

Regarding your student loans, you should investigate whether South Carolina has implemented the SECURE Act provisions with respect to repaying student loans from 529 plans. Under the SECURE Act, an individual can use $10,000 worth of 529 money to repay student loans, but implementation is at the state level, and not all states allow this. Some consider it a non-qualified distribution while others haven't yet taken action.

If SC does allow, you could each fund a 529, take the state tax deduction and use the $10,000 x2 to pay down your loans.
sd323232
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Re: Refinance Student Loans before buying a house?

Post by sd323232 »

you are making 300K combined, why cant you pay off school loans in a year or two and then save for the house? i dont understand
sterlingcooper05
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Re: Refinance Student Loans before buying a house?

Post by sterlingcooper05 »

Don't touch her federal student loans. The forgiveness programs will be most beneficial for federal loans. But, you should probably not wait for forgiveness to pay them off quickly. Your income should eliminate them before a 5 or 10 year forgiveness program kicks in. Nearly $250K in debt, not including mortgage, is quite high. You're in a weak position while shopping for a house and mortgage, even with your high income.
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erebusxc47
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Re: Refinance Student Loans before buying a house?

Post by erebusxc47 »

flyfishers83 wrote: Thu Nov 19, 2020 10:50 am Regarding your student loans, you should investigate whether South Carolina has implemented the SECURE Act provisions with respect to repaying student loans from 529 plans. Under the SECURE Act, an individual can use $10,000 worth of 529 money to repay student loans, but implementation is at the state level, and not all states allow this. Some consider it a non-qualified distribution while others haven't yet taken action.

If SC does allow, you could each fund a 529, take the state tax deduction and use the $10,000 x2 to pay down your loans.
Was not aware of this - will need to look into it more as neither of us have 529s. Is this tax advantage only applicable if you live in a state with an income tax? SC has state income taxes [7% is top bracket over $15K joint, filing married] - TN does not have any state income taxes. Maybe we should take advantage of that before we move to TN.
flyfishers83
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Re: Refinance Student Loans before buying a house?

Post by flyfishers83 »

Correct. The advantage is saving state income tax. Not a huge amount of money, but if you could take advantage, probably enough to make worthwhile.

My state has not implemented the SECURE Act provisions. The provisions have been under "evaluation" for months and months and months.
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erebusxc47
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Student Loans vs. Retirement

Post by erebusxc47 »

[Thread merged into here, see below. --admin LadyGeek]

What's the Boglehead community's thoughts on paying down student loans vs. investing in retirement accounts? My specific details are below. Racked up some CC Debt in grad school which should be paid in full by December 2020. Only other debt besides Student Loans is her 2019 RAV4 [$22k @3.99% = ~$420/month with end of term in Aug 2025 - plan to keep until wheels fall off]:

Location: Charleston, SC [will likely move to Nashville, TN in the next 1-2 years - should not impact income significantly]
Age: Him = 30, Her = 29

Income: [both of us are likely to see income growth in the coming years, but for the sake of simplicity, assume it stays constant]
His: $120k salary + $30k bonus [consultant]
Her: $150k -$180K [dentist, compensation is variable based on production, so hard to exactly pinpoint year to year]
Total: $270K-$300k salary [plus $30K bonus, which isn't guranteed]

Student Loans:
His: ~$145K in a private loan [@ 5.109% = ~$1700/month through December 2029 - will likely refinance in Jan 2021 to take advantage of improved FICO score as a result of CC pay off and lower interest rates currently available]

Her: ~$173k

[$100k in a 0% interest family loan - not strictly legal given 0% interest rate - plan to start paying in Jan 2022 through December 2027 = ~$1,670/month; lending family member is supportive of this timeline and wealthy enough to accept any delays]

[~$73K @ average rate of 5.51% = ~$820/month through December 2030 - currently at 0% due to COVID - plan to resume paying in January 2021 - considering refinancing (*see note below)]

Total Student Loans: $318K [definitely a lot, but the NPV should be a net positive over the long run]

Retirement Options:

Him: Company provides 3% of compensation [$3.6K/year based off salary] as 100% vested 401k contribution REGARDLESS of individual contirbution [spread equally over 24 pay periods]. In addition, 1.5% of compensation [$1.8K/year based off salary] contributed once per year, but vested over 4 year schedule. If bonus is granted, then that is applied once per year in February [3%* $30K = $900 and is 100% vested & 1.5%* $30K = $450 which is vested over 4 years]. Access to Mega Backdoor Roth available in retirement plan; however, unlikley to take advantage of due to cash flow.

Her: No company options available

Alternative Retirement Accounts:
Currently maxing HSA joint contribution of $7.1K/year [spread evenly over 24 paychecks] through his employer
Will likely take advantage of Backdoor Roth @ $6k/each per year.


Question to Bogleheads:
Should we throw all "free cash flow" beyond minimum debt payments towards student loans? Alternatively, should we max out retirement accounts [his 401k, joint HSA, and both backdoor roths], then throw any remaining cash towards student loans [prioritizing federal/private loans before 0% family loan]?

Current Plan of Attack [open to modifying based on responses from Bogleheads...]:
1. Max out 2020 Backdoor Roth for both = $12k [should have enough cash to do so prior to April 2021 Tax Deadline for 2020 Tax year - keep in low risk investment in case we need to tap into until cash reserves built - see #3]
2. Evenly contribute to joint 2021 HSA [$7.1K over 24 pay periods]
3. Build 3 Months Emergency Fund [Will be able to do so by June 2021 - re-allocate existing back door Roths to 70% stock/ 30% bond portfolio]
4. Pay off her Car [Completed by October 2021]
5. Max out 2021 Backdoor Roths [Completed by December 2021]
6. If 2021 bonus granted in December 2021, contribute $19k to his 2021 401k
7. Evenly contribute to his 401k [$19K] and joint HSA [$7.1K] through 2022 paychecks
8. Max out 2022 backdoor Roths [$12k]
9. Build towards 6 month Emergency Fund
10. Continue to prioritze retirement accounts, except Mega Backdoor Roth, over student loans - once retirement accounts full, any excess cash goes towards student loans

Rationale;
Because we fall on the cusp of the 24%/32% marginal income tax bracket, any pre-tax savings effectively "save" 24%/32% * [pre-tax contributions]. In our specific, case, it is $19K [his 401k] + $7.1k [her HSA] = $26.1K * [24% or 32%] = $6.2K - $8.4K per year. I *think* it makes more sense to max out retirement first, then throw any remaining cash at student loans.


Note: While not permitted on Bogleheads to guess the future legislation, we are monitoring the incoming Biden administration's plan to forgive some part of student loans. Forgiveness details are vague and very much in flux until anything is passed into law, but will likely keep her federal portion in federal until more clarity is available. Even if forgiveness is not passed or we do not qualify due to income, will continue to take adavantage of 0% rate associated with COVID response as long as possible.
Olemiss540
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Re: Student Loans vs. Retirement

Post by Olemiss540 »

You are going to get cashflow crunched I have a feeling. New Rav was probably a poor decision. What is your longer term plans with regards to housing and kids? I would work my tail off to free up as much cashflow as possible by attacking one loan at a time.

I would get the match and fund the backdoor Roths as a way to build some form of cash buffer but otherwise I would go hard after loan pay down. Going to be a slog but great income!
I hold index funds because I do not overestimate my ability to pick stocks OR stock pickers.
JPM
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Re: Student Loans vs. Retirement

Post by JPM »

DW is a dentist and should become a high earner. $173,000 is a modest debt for achieving that. A dentist could be making double current income or more in Midwest so can probably double income in growing Nashville if working full time in a reasonably good situation. At some point she will probably want to equip her own dental office. Dentists working in gov't jobs here like the VA or for the county usually have a side private practice renting another dentist's office PMs and weekends and doing his/her overflow, and later retiring from the govt job on a nice pension and equipping their own offices. May want to free up credit for that eventuality, which may come sooner rather than later in Nashville, by paying down the loans.

Unclear what OP's future earning potential may be. Loan rates described are relatively high for today so another reason to focus on clearing the debt, especially with investment markets being currently so high and near term expected investment returns in the financial markets likely to be modest. Very good income prospects for a young professional couple so if able to LBYM for a couple of years should be able to largely clear the debt and have lots of credit space when moving to Nashville.
awval999
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Re: Student Loans vs. Retirement

Post by awval999 »

I think this is where we refer the OP to Dave Ramsey, right?

OP your debt is an *emergency*.

Credit cards? Brand new car? Family loans? $300k in student loans?
HEPennyPacker
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Re: Student Loans vs. Retirement

Post by HEPennyPacker »

I'm in a similar place albeit lower relative numbers and I would focus as much on debt as possible. I don't like the risk. So, I would personally fund up to the company match and start killing the debt. Try to work the numbers so you could be debt free in 2-4 years.....then with your income, at your age, and no debt imagine how much you could put away!
Firemenot
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Re: Student Loans vs. Retirement

Post by Firemenot »

Not trying to be political, but with all the talk by politicians about loan cancellation, I’d save for retirement. Wouldn’t you feel like the ultimate chump if you scrimped to pay off your loans and legislation is enacted that would have cancelled them?

Edit: I didn’t read your details. Too long for my attention span on a Saturday.
awval999
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Re: Student Loans vs. Retirement

Post by awval999 »

Firemenot wrote: Sat Nov 21, 2020 8:07 am Not trying to be political, but with all the talk by politicians about loan cancellation, I’d save for retirement. Wouldn’t you feel like the ultimate chump if you scrimped to pay off your loans and legislation is enacted that would have cancelled them?

Edit: I didn’t read your details. Too long for my attention span on a Saturday.
Relying on the government to *help* isn't a long term way to financial security.
Firemenot
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Re: Student Loans vs. Retirement

Post by Firemenot »

awval999 wrote: Sat Nov 21, 2020 8:14 am
Firemenot wrote: Sat Nov 21, 2020 8:07 am Not trying to be political, but with all the talk by politicians about loan cancellation, I’d save for retirement. Wouldn’t you feel like the ultimate chump if you scrimped to pay off your loans and legislation is enacted that would have cancelled them?

Edit: I didn’t read your details. Too long for my attention span on a Saturday.
Relying on the government to *help* isn't a long term way to financial security.
I’m not suggesting they rely on the government. I’m saying the money they WOULD pay extra on the student loans they should invest instead just in case. Can you imagine how sick you’d feel if loans you paid down early would have been cancelled? Given the politicians that are discussing it, it’s a legitimate possibility.
Last edited by Firemenot on Sat Nov 21, 2020 8:17 am, edited 1 time in total.
KlangFool
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Re: Student Loans vs. Retirement

Post by KlangFool »

OP,

Max up all pre-tax accounts. Then, pay off the car loan first. After that, attack other debts.

KlangFool
awval999
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Re: Student Loans vs. Retirement

Post by awval999 »

Firemenot wrote: Sat Nov 21, 2020 8:17 am
awval999 wrote: Sat Nov 21, 2020 8:14 am
Firemenot wrote: Sat Nov 21, 2020 8:07 am Not trying to be political, but with all the talk by politicians about loan cancellation, I’d save for retirement. Wouldn’t you feel like the ultimate chump if you scrimped to pay off your loans and legislation is enacted that would have cancelled them?

Edit: I didn’t read your details. Too long for my attention span on a Saturday.
Relying on the government to *help* isn't a long term way to financial security.
I’m not suggesting they rely on the government. I’m saying the money they WOULD pay extra on the student loans they should invest instead just in case. Can you imagine how sick you’d feel if loans you paid down early would have been cancelled? Given the politicians that are discussing it, it’s a legitimate possibility.
I agree with your point to leave the *federal* student loan for last. Even excluding that one, they still have an emergency. By the time they get to the *federal* student loan the question would be answered.
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WoodSpinner
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Re: Student Loans vs. Retirement

Post by WoodSpinner »

awval999 wrote: Sat Nov 21, 2020 8:21 am
Firemenot wrote: Sat Nov 21, 2020 8:17 am
awval999 wrote: Sat Nov 21, 2020 8:14 am
Firemenot wrote: Sat Nov 21, 2020 8:07 am Not trying to be political, but with all the talk by politicians about loan cancellation, I’d save for retirement. Wouldn’t you feel like the ultimate chump if you scrimped to pay off your loans and legislation is enacted that would have cancelled them?

Edit: I didn’t read your details. Too long for my attention span on a Saturday.
Relying on the government to *help* isn't a long term way to financial security.
I’m not suggesting they rely on the government. I’m saying the money they WOULD pay extra on the student loans they should invest instead just in case. Can you imagine how sick you’d feel if loans you paid down early would have been cancelled? Given the politicians that are discussing it, it’s a legitimate possibility.
I agree with your point to leave the *federal* student loan for last. Even excluding that one, they still have an emergency. By the time they get to the *federal* student loan the question would be answered.
Sigh,

I wouldn’t hesitate to throw everything at the Student Loan debt AND Refinance as soon as possible. I wouldn’t bet on Loan forgiveness — very, very, very unlikely to happen.

Investing can wait — especially since you don’t have to worry about a match.

You have some time and flexibility to build a firm foundation for your future. Please don’t waste it.

WoodSpinner
tashnewbie
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Re: Student Loans vs. Retirement

Post by tashnewbie »

OP, I see you’ve posted several other posts this week that are really all intertwined. I’d recommend keeping the discussion in one post because they are all related. For example, in one post you asked if you should refinance the student loans to help make a down payment on a house. Now you’re asking if you should prioritize investing over paying off student loans. There are many moving pieces, so you’d probably get the best, most-informed advice if people knew the full picture.

It doesn’t look like you need to contribute anything to your 401k to get a match. I assume your employer makes the nonelective contributions because it’s a safe harbor plan. You’re getting at least $5400 added to the plan, up to almost $7000 with the minimum bonus.

I probably wouldn’t add anything to the 401k and would just do backdoor Roth IRA contributions which can be used as backup cash reserves.

Then I’d refinance the private student loans.

Then attack all loans, including the car loan, aggressively. You could do the debt snowball method which means paying off the loan with the smallest balance first and then proceeding to pay them off in ascending order of balance. Or you could pay off the loan with the highest interest rate first, and then going in descending order of interest rate. The choice is yours. Do what you think will help you knock these out the quickest.

Might be worth keeping the federal loan around until the private loans are paid, just in case you have cash flow issues. Federal loans have more payment protections than private loans. I don’t think you will encounter those types of issues, but it might be worth not refinancing the federal loan until your cash flow is more manageable and/or you’re close to paying the others off.

I agree with another poster that I think you should view your debt as an emergency. Good luck.
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Re: Refinance Student Loans before buying a house?

Post by LadyGeek »

erebusxc47 - As noted by tashnewbie, it's best to keep all the information in one spot. There are many moving parts and it's important to see the "big picture". I merged your second question (student loans vs. retirement) into the first.

Here's the proposed attack plan for putting all of the parts together:
erebusxc47 wrote: Sat Nov 21, 2020 3:26 am Current Plan of Attack [open to modifying based on responses from Bogleheads...]:
1. Max out 2020 Backdoor Roth for both = $12k [should have enough cash to do so prior to April 2021 Tax Deadline for 2020 Tax year - keep in low risk investment in case we need to tap into until cash reserves built - see #3]
2. Evenly contribute to joint 2021 HSA [$7.1K over 24 pay periods]
3. Build 3 Months Emergency Fund [Will be able to do so by June 2021 - re-allocate existing back door Roths to 70% stock/ 30% bond portfolio]
4. Pay off her Car [Completed by October 2021]
5. Max out 2021 Backdoor Roths [Completed by December 2021]
6. If 2021 bonus granted in December 2021, contribute $19k to his 2021 401k
7. Evenly contribute to his 401k [$19K] and joint HSA [$7.1K] through 2022 paychecks
8. Max out 2022 backdoor Roths [$12k]
9. Build towards 6 month Emergency Fund
10. Continue to prioritze retirement accounts, except Mega Backdoor Roth, over student loans - once retirement accounts full, any excess cash goes towards student loans
If you have any questions, ask them here.
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Re: Student Loans vs. Retirement

Post by LadyGeek »

Firemenot wrote: Sat Nov 21, 2020 8:17 am
awval999 wrote: Sat Nov 21, 2020 8:14 am
Firemenot wrote: Sat Nov 21, 2020 8:07 am Not trying to be political, but with all the talk by politicians about loan cancellation, I’d save for retirement. Wouldn’t you feel like the ultimate chump if you scrimped to pay off your loans and legislation is enacted that would have cancelled them?

Edit: I didn’t read your details. Too long for my attention span on a Saturday.
Relying on the government to *help* isn't a long term way to financial security.
I’m not suggesting they rely on the government. I’m saying the money they WOULD pay extra on the student loans they should invest instead just in case. Can you imagine how sick you’d feel if loans you paid down early would have been cancelled? Given the politicians that are discussing it, it’s a legitimate possibility.
Speculation about future legislation is prohibited by forum policy, see: Unacceptable Topics
Politics and Religion

In order to avoid the inevitable frictions that arise from these topics, political or religious posts and comments are prohibited. The only exceptions to this rule are:
  • Common religious expressions such as sending your prayers to an ailing member.
  • Usage of factual and non-derogatory political labels when necessary to the discussion at hand.
  • Discussions about enacted laws or regulations that affect the individual investor. Note that discussions of proposed legislation are prohibited.
  • Proposed regulations that are directly related to investing may be discussed if and when they are published for public comments.
This forum is focused on investing that is directly actionable to personal investors. We don't hold debates on conjecture.

The whole point of the policy is to (1) eliminate contentious disagreements that result from these discussions and (2) keep investors from making bad decisions. Proposed legislation changes many times between the time it's introduced and signed into law.

The best approach is to make your decisions based on current law. When the law changes, make a decision at that time.

Please refrain from further discussion regarding potential loan cancellation.
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Re: Student Loans vs. Retirement

Post by Firemenot »

LadyGeek wrote: Sat Nov 21, 2020 9:17 am
Firemenot wrote: Sat Nov 21, 2020 8:17 am
awval999 wrote: Sat Nov 21, 2020 8:14 am
Firemenot wrote: Sat Nov 21, 2020 8:07 am Not trying to be political, but with all the talk by politicians about loan cancellation, I’d save for retirement. Wouldn’t you feel like the ultimate chump if you scrimped to pay off your loans and legislation is enacted that would have cancelled them?

Edit: I didn’t read your details. Too long for my attention span on a Saturday.
Relying on the government to *help* isn't a long term way to financial security.
I’m not suggesting they rely on the government. I’m saying the money they WOULD pay extra on the student loans they should invest instead just in case. Can you imagine how sick you’d feel if loans you paid down early would have been cancelled? Given the politicians that are discussing it, it’s a legitimate possibility.
Speculation about future legislation is prohibited by forum policy, see: Unacceptable Topics
Politics and Religion

In order to avoid the inevitable frictions that arise from these topics, political or religious posts and comments are prohibited. The only exceptions to this rule are:
  • Common religious expressions such as sending your prayers to an ailing member.
  • Usage of factual and non-derogatory political labels when necessary to the discussion at hand.
  • Discussions about enacted laws or regulations that affect the individual investor. Note that discussions of proposed legislation are prohibited.
  • Proposed regulations that are directly related to investing may be discussed if and when they are published for public comments.
This forum is focused on investing that is directly actionable to personal investors. We don't hold debates on conjecture.

The whole point of the policy is to (1) eliminate contentious disagreements that result from these discussions and (2) keep investors from making bad decisions. Proposed legislation changes many times between the time it's introduced and signed into law.

The best approach is to make your decisions based on current law. When the law changes, make a decision at that time.

Please refrain from further discussion regarding potential loan cancellation.
I’ll abide by the rule but I don’t think it’s prudent to treat laws as static. They change all the time and most professional planners factor into their calculation potential changes and their likelihood of occurring. I certainly do.

As a lawyer I also certainly advise my clients on potential law changes. We spend a lot of time on that because their future outcomes are heavily dependent on future laws.

)And just to be clear, none of my posts constitute legal advice.)
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Re: Refinance Student Loans before buying a house?

Post by 260chrisb »

Nate79 wrote: Tue Nov 17, 2020 2:55 pm You won't like my answer but you are significantly and deeply in debt, basically already own a house call Student Loans + car debt. I would pay off all your debt before saving up for a down payment on a house. But if you want to go the risky route by going even more into debt by buying a house while deep in debt, good luck.

Discussion about future legislation is off limits on bogleheads so won't comment on that part.
This is my answer as well. I really get confused with these posts as I personally wouldn't be able to sleep at night with this much debt hanging over my head much less even thinking about taking on more debt for a house. Student loans, cars, credit cards......where does it end?? You're on the brink of having debt for the rest of your life!! You have a phenomenal income and at that level you should NEVER have any financial issues. Seriously, think about it! Take the next two years use it and get rid of your student loans, pay off the car, and the CC, and don't take in any additional debt. Then find yourself a nice house and enjoy life and the freedom of high income and no debt. I'm guessing you're going to like it! Good luck.
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