Student Loan Debt Repayment

[oOpsicle]

Generally, I would like recommendations on a good book for beginners regarding the iTulip view of personal financing. Specifically, I'm looking for well reasoned advice regarding retirement savings and loan repayment. Here's my situation:

I'm a 29 year old recent graduate employed in the legal field with the net income of $43k. I own a 2000 Nissan Xterra with 150k miles, probably worth $2k. I have $7k in a Pioneer MUTF, $12k in savings account, $900 a MMA, and a recently opened but unfunded Roth IRA.

My only major financial liability is $60,000 worth of student loans used to fund my graduate studies ($20k at 6.8%, $40k at 1.88%). The loans have been deferred until 2010. I've been paying about $350/mo on them which covers most of the interest. I currently live with my father, so I don't pay rent. (Nevertheless, I do have a kind of expensive girlfriend.)

My employer does not have a 401k program, so I'm on my own for retirement purposes.

How much, if any, should I be saving for retirement? How much should I be paying on the student loans? Should I liquidate my money assets and put it all towards my loan debt?

[jtabeb]

Re: Student Loan Debt Repayment

Should I liquidate my money assets and put it all towards my loan debt?

Yes! (that will likely do better than your investmens would)

OR Buy gold/silver. But Stocks + Debt is bad.

[rabot10]

Re: Student Loan Debt Repayment

Hey look for a way to make more money doing your own thing, that is the best way to get ahead. Your young with a hot girl enjoy - you will be old soon enough

[ThePythonicCow]

Re: Student Loan Debt Repayment

Should I liquidate my money assets and put it all towards my loan debt?

It can be quite useful to have 3 to 6 months of cash on hand to liquidate unexpected problems. So I would not go to a cash poor position just to pay off those debts, because once paid, you cannot unpay one of those dollars.

Once you have that cash cushion, then pay off the higher percentage loan more quickly, then start saving mostly in safe treasuries or bank CD's or such right now. I'd pay that lower interest loan as slow as the government allows.

It can then be worth it to start investing in other stuff, because most of us humans just don't seem to learn very well unless we have skin in the game. However I would not put much skin in right now, as it will might mostly be lost as "tuition in the school of hard knocks" depending on how far down the bottom is to this market.

I'd also recommend getting rid of the expensive girl friend, however (1) I'd be a flaming hypocrite to offer such advice, and (2) unless you import a girl friend from some foreign country, it can be difficult to find a good low cost one here in America. So be good to her, but don't be afraid to set clear limits on money. Letting any loved one or family member overspend is not a the right thing to do in the long run, and the job falls to you and no one else to set those limits.

As I learned too late in life to do me (or my loved ones) much good, setting such limits for both ones spouse and ones children is an important responsibility and act of love.

[ThePythonicCow]

Re: Student Loan Debt Repayment

I would like recommendations on a good book

It will take more than one book to teach you all that life offers about money and women!

Sorry, I cannot recommend any particular one. My library has long since drifted off in other directions from the ones you are considering at this time.

[Verrocchio]

Re: Student Loan Debt Repayment

It can be quite useful to have 3 to 6 months of cash on hand to liquidate unexpected problems. So I would not go to a cash poor position just to pay off those debts, because once paid, you cannot unpay one of those dollars.

Once you have that cash cushion, then pay off the higher percentage loan more quickly, then start saving mostly in safe treasuries or bank CD's or such right now. I'd pay that lower interest loan as slow as the government allows.

It can then be worth it to start investing in other stuff, because most of us humans just don't seem to learn very well unless we have skin in the game. However I would not put much skin in right now, as it will might mostly be lost as "tuition in the school of hard knocks" depending on how far down the bottom is to this market.

I'd also recommend getting rid of the expensive girl friend, however (1) I'd be a flaming hypocrite to offer such advice, and (2) unless you import a girl friend from some foreign country, it can be difficult to find a good low cost one here in America. So be good to her, but don't be afraid to set clear limits on money. Letting any loved one or family member overspend is not a the right thing to do in the long run, and the job falls to you and no one else to set those limits.

As I learned too late in life to do me (or my loved ones) much good, setting such limits for both ones spouse and ones children is an important responsibility and act of love.

oOpsicle, I second what the Wise Cow has told you. Keep one eye on the expensive girl and the other eye on your $43k job. The income from the job is essential to your future. If you can keep the job and we have the expected high inflation (Poom!), your student loans will become an insignificant liability. Hedge this by building up several months of cash, like the Good Cow said.

[plinko]

Re: Student Loan Debt Repayment

I'm 25, and totally understand your situation. My best advice: create four basic accounts - one for allocated gold, one for t-bills (i.e. treasurydirect), one for some trading/ira (scottrade/etrade/etc.), and finally your bank account (if you're neurotic, use banktracker to find one that isn't too down the hole with toxic assets).

I am still trying to follow the above advice. Now, as far as good advice for PF stuff, I like reading the following three websites together: itulip, iwillteachyoutoberich, and thesimpledollar.

I feel like each site has their tradeoffs: iwillteachyoutoberich will encourage you to automate some things, and value yourself/be an entrepreneur. thesimpledollar is similar, but with a bit more of a conservative/frugality bent. Finally, itulip to tell you where to REALLY put the money you've saved.

"I will teach you to be rich" is now a book, I like some of the PF points it makes, but the itulip reader in me will always disagree with some of Ramit Sethi's advice on where to invest money. Nevertheless, it's worth browsing at the bookstore.

My first PF book I bought when I graduated was Beth Kobliner's "get a financial life", I honestly wouldn't bother with it as it's more factish and again the itulip in me makes me want to burn it at times.

My personal advice (warning: I'm not responsible if I'm wrong): live with your dad until you whittle away some more of your debt. I personally felt that once I was debt-free and living more than independently, I had less circumstances involved to let me feel better at understanding markets.