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Author: aj485 Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 308478  
Subject: Re: ready to attack my $65k student loan debt Date: 1/18/2014 4:22 PM
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The loan situation: 5 private loans (sallie mae) totaling $49k w/ interest rates b/w 2.5% and 8.5%. I have 2 federal loans totaling $14k w/ rates at 6.5%.
I have defaulted on the private loans and even had a garnishment on the federal loans 5 years ago... All my loans are currently in good standing and account for about $400 in monthly payments...


By making only about $400/month in payments, I suspect that you are paying almost all interest and very little principal each month. That could be confirmed if you will provide the interest rate, loan balance and minimum payment for each loan. If that's the case, by paying only the minimum payments, you are setting yourself up for a very long pay down.

Income: I am a technical recruiter currently making about $50k annually w/ opportunity for commissions. Now in my second year and hoping to approach the $100k mark by 2015.

I am wondering the best way to go about riding myself of this terrible debt so that I can get on with my life (buying a house, starting a family, making investments, etc).


Are you on any type of repayment plan (like income based or income contingent) for any of the loans? If so, you need to be aware of what your payments may increase to if your income increases.

SO, fools, what is the best way to get on track and bury my debt FAST?

The fastest way would be to increase the amount that you are paying toward the debt and pay down each one in interest rate order. (There may be some caveats on the pay down order if some of your loans are variable rate and others are fixed rate.)

In order to put more money toward the pay down, can you decrease your other monthly expenses? Can you continue to live on your base pay alone, paying all of the commission income toward the debt?

You also need to be sure that you aren't robbing Peter to pay Paul by charging up consumer debt while paying off your student debt, so be sure that you are paying off any credit cards monthly and you aren't taking on new debt. If you aren't already someone who budgets, it would be helpful to do so. Tracking all of your expenses each day would be a good first step. If you do budget, you need to examine that budget for any additional money that you can find to put toward the student debt.

AJ
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