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Old 01-06-2015, 11:46 AM #1
mouse87
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Join Date: May 2007
Loan payment adivce

Long story short I'm College dropout class of 2014 going into the air force in march. I'm work a part time job making roughly $100/week until then. While i could make minimum payments, I have $7000 saved in the bank and want to be debt free asap

Loan 1: Subsidized stafford $3,500
Loan 2: Unsubsidized stafford $2056 at 3.86% interest

monthly federal payment: $55

Loan 3: Chase bank $10,900 at 3.97% interest
month payment $65

Does it make more sense to just pay off both federal loans and be done with them? Or start paying off the Chase loan for it's slightly higher interest rate?
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Old 01-06-2015, 05:54 PM #2
BigMan23
 
 
Join Date: Dec 2007
due to the only slight difference in interested and over monthly payment, to me it makes more sense to get the federal loans out of the way. Just my .02 though
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Old 01-06-2015, 06:09 PM #3
eruffini
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Pay off both of the smaller loans in one shot. Save the remainder of your savings for emergencies and pay more than the minimum on the last loan.

It will help build credit keeping the one loan and making steady payments on it before trying to pay it off.
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Old 01-15-2015, 05:55 PM #4
bnctaj
 
 
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Quote:
Originally Posted by mouse87 View Post
Long story short I'm College dropout class of 2014 going into the air force in march. I'm work a part time job making roughly $100/week until then. While i could make minimum payments, I have $7000 saved in the bank and want to be debt free asap

Loan 1: Subsidized stafford $3,500
Loan 2: Unsubsidized stafford $2056 at 3.86% interest

monthly federal payment: $55

Loan 3: Chase bank $10,900 at 3.97% interest
month payment $65

Does it make more sense to just pay off both federal loans and be done with them? Or start paying off the Chase loan for it's slightly higher interest rate?
With the two being that close, you can really choose what you want to do without too much of a consequence, with regards to whether you want to pay off the one with the higher interest first or practice debt-snowballing. If one's got a variable interest, though, I'd put more towards that one first, if I were to pay off one instead of the loans instead of investing in TSP or a mutual fund or IRA, which I wouldn't, unless my returns on investment were higher for paying off the loans sooner.

The interest rate on my IRA last year was over 15%. Student loan interest rate on my highest loan was 6%. Investing gave me 9% more return than student loans.

Here's an article on debt snowballing:
http://www.daveramsey.com/blog/how-t...l-method-works
Here's an article on investing instead of paying loans:
http://money.cnn.com/2014/12/11/inve...student-loans/
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Last edited by bnctaj : 01-15-2015 at 05:58 PM.
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