r/StudentLoans • u/littlz253 • 1d ago
Advice Pay them off or stay in apartment
So I owe maybe 10 k in student loans. I got a small settlement 25k. Should I just pay them off? I have been paying on a no interest plan an paid down from 20 or 15k. I want to buy a home and as a single person the mortgage is a big commitment. So i figure just pay them off
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u/pAusEmak 1d ago
If I were in your shoes, I'd pay off all my debt before buying a home.
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u/littlz253 1d ago
Yea it just that and then I owe 2k on my car
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u/pAusEmak 1d ago
Pay off both loans first, then start saving for your home. š You can use the extra income to help pay off your mortgage faster.
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u/ThrowItAway1218 1d ago
If you have no debt, your credit score will go down. It's absurd.
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u/littlz253 1d ago
Thatās my fear but Iām at an 800 so should be okay now? Goes down and then comes back up just takes time
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u/TropicalFalls 1d ago
I had my credit score drop because I had no credit card debt. I paid off all at the same time. So every card reported at the same time. It really pissed me off.
With you only having your school loans for a few years, I would pay a BIG chunk out of it but now all.
Why? Because you want to have a credit mix. Paying it off so fast will probably drop your score. I'm not sure how low it will go and how long it will take to recover. You could call FICO and ask them.
Your credit is GREAT, btw!
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u/ThrowItAway1218 1d ago
Yes, that is true. I'm at 829 with 3% utilization. I've intentionally not paid off my remaining debts specifically to not tank my credit.
My significant other bought a house in December and his credit score has gone down 40 points and has yet to rebound. It's crazy!
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u/dsmemsirsn 1d ago
But youāre not buying now; pay the debt. The ācredit scoreā will go up eventually.
You can build your home savings with the loans and car payments.
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u/Radiant_Fig6965 1d ago
is 25K what you have after any taxes? Do you have any savings? When do you start accumulating interest and what will the interest rate be? What is your current income and expenses? All of this will info will help give an actually good answer
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u/littlz253 1d ago
Current income 42.00 an hour at 40 hours a week. I bring home maybe 1800 every two weeks not counting the 376 i automatically have go into my savings.
Planet fitness 29.00 (every 20th) Rent 542 Gas 140 Phone 65 Car insurance 200 Car payment 158 Internet 29.95 Electric 70 Nails 200 Groceries 400 Kindle unlimited 12 Student loans 250
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u/ThrowItAway1218 1d ago
Your rent is $542/mo? š³
You won't get that with buying a home.
Continue to save for a home in the future (maybe a 5 yrs plan?).
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u/littlz253 1d ago
Yea idk I mean that way I can see if I find something I love
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u/littlz253 1d ago
But Iām also worried they are going to ask me to move soon. They are going to remodel my u it which would mean all my stuff goes to storage and I go to a hotel
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u/Imaginary_Shelter_37 1d ago
$200 for nails is what caught my eye.
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u/littlz253 1d ago
Iām not getting them done currently. But I do like too so I just keep it in the budget. I do get my hair done every four months which is about 160 and I use my credit card and pay it off.
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u/TropicalFalls 1d ago
You rent, so you should have rental insurance. NEVER go without rental insurance. Plus you should be budging more costs (household, hair, all subscriptions, clothing, CREDIT CARDS, TV, water, etc).
Pay off the school loans and be done with it.
Do not buy a home. Everyone wants to buy a home and they don't budget for repairs. They don't grow their income over the years, etc. Also, caring for a home is a lot of work.
Also, a mortgage is a lot more than $1,000 a month, especially if you don't put 20% down payment. If you have really low standards and want to live in a dangerous neighborhood...then go buy a house now for less than $1,000 a month.
If you are just starting in your career, best to wait til your experience and income grows and you save more money for a down payment. Plus if you are starting your career, expect to work hard and have to put on overtime, which will leave not much time to care for a home.
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u/littlz253 1d ago
Well I do have rental insurance but itās like 120.00 a year. If I do buy I plan to rent out a room and the ultimate goal would be to build an adu on some day prior to selling
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u/TropicalFalls 1d ago
Ok. Never heard of buy a plan to rent out propert. What state?
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u/littlz253 1d ago
WA and I would rent a room I mean I lived in my first apartment 11 years and Iām on my second for about 5 or 6
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u/littlz253 1d ago
I rarely go out I donāt have any streaming services only kindle unlimited. And I always pay my credit card down to zero I ever spend more then I have
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u/littlz253 1d ago
I have a Roth IRA with 11k so far, a fidelity account with maybe 2k, 13k in savings in bank and then 16 k in checks
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u/ChoopeyChoop 1d ago
What percent interest are your loans at? See if there is a HYSA that gives a better return than you are being charged interest. (Some would say to out it in the stock market, but that is a little... tumultuous at the moment)
If you can't find such a HYSA, then I say just pay it off.
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u/littlz253 1d ago
I was on that save plan 0 interest and I did my recert for student loans I think it is now saying there was an error but honestly if I have about 29 k I may as well pay off loans
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u/ninjacereal 1d ago
I bought my home with student debt and have no regrets. The best time to buy a house is yesterday.
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u/TropicalFalls 1d ago
I say pay off the school loans, make the minimum payment on your car, put savings in a high yield savings account, use credit card minimally...so you show responsible use of credit.
How long have you had the school loans?
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u/littlz253 1d ago
I have been out of school for maybe two to three years? My masters degree was free also š¤ I did a program. Iāve been paying on the loans since covid and was in school during covid but I just really started getting aggressive with my payments
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u/girl_of_squirrels human suit full of squirrels 8h ago
What are the interest rates for your loans? And how much do you make compared to that loan debt?
Let's get you a financial management 101 resource. Here's requisite plug of the r/personalfinance money management advice in their prime directive wiki (which also has a flow chart version) because a budget and emergency fund are step zero for financial health. More importantly, it covers middle-class financial management in an easy-to-follow way and has the interest rate bands to indicate when aggressive repayment vs backburner is prudent. That 3-6 month emergency fund essential as a safety net for basic financial health
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u/Joe_Ald 1d ago
I would buy the house. Your payment at 10k shouldnāt be that high.
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u/SaltyCrashNerd 1d ago
Especially with no interest.
Realistically, with the market and economy being as it is (and as itās going to be in the near future), are you going to be able to save up 25k for a down payment in the near future?
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u/littlz253 1d ago
Well hears the thing so I got hit by a car and got 25k and Iāve even saving Although bot as much as I could for a long time so I have like 30k. My car payment is only 158 and the insurance 200 but Iām not in a rush because then Iāll have to pay the bank back 100 lol
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u/littlz253 1d ago
Why imdoes it feel like some people think Iām crazy
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u/Joe_Ald 1d ago
Maybe you are maybe you arenāt. It isnāt for any of us to tell. Whatever your comfort level is fine. Iām happy with cash and property and donāt mind carrying some low interest debt. Do whatās best do you!
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u/littlz253 1d ago
Iām scared Iāve never had stability other than what Iāve built on my own. I donāt have any supports just me and was homeless a lot as a kid. Iām so scared of things like ending up homeless or bankrupt. It isnāt the best where I am now. Lots of people on drugs. The people under neath my are on heroin and Iām always worried they are going to start a fire.
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u/Jesus-God-Cornbread 1d ago
Just pay them off and be done with it.