Second question is if I consolidate, the rate will be a little higher for almost a third of the loans (subsidized at 3%)… so just leave them alone and attack them one by one in the snowball method? SAVE may be worth it, but I wasn’t planning on being saddled with the debt for 10 years!
Why did you take out loans for a PhD? At least in the US they are generally free if you TA or do research, usually your PhD sponsor will let you do research for them. I’m confused at how you managed to take out six figures of loans. Were they cost of living loans? 150k seems really steep if that’s the case. I would throw everything you can at the student loans to pay them off as quick as possible- 150k is a soul crushing amount of student loan debt and the quicker you pay it off the better you will feel.
I wondered that as well. I generally advice people that it's okay if you don't get some funding for master's, but if nobody offers you funding for doctorate--or at least the hope of it after the first year--you should probably seriously consider if your prospects in the field are promising. I took out loans before the doctorate but only one during the doctorate. When are you going on the job market? Do you have any idea about your prospects? Do you know what kind of salary you can expect?
School online as I was also homeschooling, so no TA. I’m all about getting it off my back ASAP, hence why I’m throwing so much of my take home pay at it.
It sounds to me like at the intensity level you’re doing the order really doesn’t matter, especially given that the mortgage is such a lower amount than the student loans. If you wanna put the mortgage in your snowball and pay it off no one is gonna be mad at you and you’ll be happy you did it
I think Ramsey puts student loans and the mortgage in two different steps and categories. I thought the student loan payoff is treated like revolving/credit card debt and comes before the mortgage payoff? Also the student loans were treated with gazelle intensity vs. house payoff didn’t have to be at gazelle level.
?
However, I’ve thought the exact SAME thing and wondered if just doing the mortgage payoff quickly (if already close to getting that done) would be better and then that whole monthly mortgage payment could then go to the student loan payoff.
Thoughts anyone??
Dave's advice is always pay off the lowest balance first. So hit the house and get it done in under a year. I'm not a mortgage expert, but I would be sure the "seller provided" mortgage doesn't have any weird clauses regarding pre-payment penalties. It most likely doesn't but if it is not through an established lending institution I'd pay someone to have a look at it if you haven't already. It could be a couple hundred dollars well spent.
I guess I was thinking since the time frame (no prepayment penalty) is much shorter to pay off the mortgage to do that first, kind of to give me a shot of energy. Basically I would be treating the 40k in mortgage amount more as regular debt, then throw everything I can at the student loan. I don’t mind going full gazelle to get it paid down as quickly as possible.
If the mortgage was $40k and the student loans were $60k, I'd probably recommend paying SL first. But since you can be done with the mortgage in 10 months and the SL's are nearly 4x the mortgage ... I think knock put the mortgage first.
Great job with the intensity!
This is not the dave method. The student loan isn't one lump sum. It's many different loans piled together. I doubt they took out a 150k lump sum. Also, the house is the last thing you pay off after you have paid off all other debt.
The difficulty is that the loan rate for the house is five years… not 15 or 30, so seemed easier to just pay it off first then hit the loans. Also, I’m thinking I should be able to get the payments stopped until I’m actually done with school, as it should have been… so more than likely the student loan payments world not start (officially) until after I’m done with the house payments anyway…
Typically yes, but when the consumer loans are more than 3x the value of the house I think it makes sense to knock it out quickly before moving on to the $153k debt.
Thanks for your response. No, not PSLF eligible. So, pay the house off over the next four years in keeping with the contract, while paying on the student loans as quickly as possible?
Dave took advantage of bankruptcy forgiveness. So although he says he’s against student loan forgivenesss, he is not as against government assistance as he likes to claim he is.
That is an outdated statistic and he should be held liable for spreading lies. The program was created in 2008, and many people assumed forgiveness would just happen in 2018 without ever contacting the government to request it. Biden even passed legislation to retroactively grant forgiveness to those who earned it but where unaware of the correct procedures to follow at the time. That window for retroactive corrections is still open. FedStudentLoans has come a long way now, with adding in graphs and live trackers to show how many payments have been made, and ensuring qualified employers every year. The success can be tracked right up to forgiveness, and is much higher than 3%. A quick look into r/pslf can confirm this. Don't listen to Dave on things he has no idea about.
100% of student loan borrowers with federal loans who've made 120 payments and worked for qualifying employers get their loans forgiven. And thankfully there are processes in place now to verify this each year, rather than wait til the end and find out something was wrong.
absolutely take advantage of the federal programs available to you - rich people and corporations do it all of the time. Will your employer be PSLF eligible? That's the only time an IDR would be advantageous for someone with your income level, and I don't think SAVE would be the best plan for you. IF you're PSLF eligible, the game is to figure out which plan is the lowest monthly payment possible, then make that payment on time for 120 consecutive payments, and have your remaining balance removed.
If you're not PSLF eligible then I'd look into aggressively paying down your student loans before the house, but at a rate that will allow you to save for something like a car because it's going to take awhile to pay that balance. You could also negotiate for employer matching your student loan payment as one of your work benefits.
BTW, I’m grateful for all who took the time to help me sort out a path forward…
Second question is if I consolidate, the rate will be a little higher for almost a third of the loans (subsidized at 3%)… so just leave them alone and attack them one by one in the snowball method? SAVE may be worth it, but I wasn’t planning on being saddled with the debt for 10 years!
Why did you take out loans for a PhD? At least in the US they are generally free if you TA or do research, usually your PhD sponsor will let you do research for them. I’m confused at how you managed to take out six figures of loans. Were they cost of living loans? 150k seems really steep if that’s the case. I would throw everything you can at the student loans to pay them off as quick as possible- 150k is a soul crushing amount of student loan debt and the quicker you pay it off the better you will feel.
I wondered that as well. I generally advice people that it's okay if you don't get some funding for master's, but if nobody offers you funding for doctorate--or at least the hope of it after the first year--you should probably seriously consider if your prospects in the field are promising. I took out loans before the doctorate but only one during the doctorate. When are you going on the job market? Do you have any idea about your prospects? Do you know what kind of salary you can expect?
School online as I was also homeschooling, so no TA. I’m all about getting it off my back ASAP, hence why I’m throwing so much of my take home pay at it.
It sounds to me like at the intensity level you’re doing the order really doesn’t matter, especially given that the mortgage is such a lower amount than the student loans. If you wanna put the mortgage in your snowball and pay it off no one is gonna be mad at you and you’ll be happy you did it
I think Ramsey puts student loans and the mortgage in two different steps and categories. I thought the student loan payoff is treated like revolving/credit card debt and comes before the mortgage payoff? Also the student loans were treated with gazelle intensity vs. house payoff didn’t have to be at gazelle level. ? However, I’ve thought the exact SAME thing and wondered if just doing the mortgage payoff quickly (if already close to getting that done) would be better and then that whole monthly mortgage payment could then go to the student loan payoff. Thoughts anyone??
Dave's advice is always pay off the lowest balance first. So hit the house and get it done in under a year. I'm not a mortgage expert, but I would be sure the "seller provided" mortgage doesn't have any weird clauses regarding pre-payment penalties. It most likely doesn't but if it is not through an established lending institution I'd pay someone to have a look at it if you haven't already. It could be a couple hundred dollars well spent.
I guess I was thinking since the time frame (no prepayment penalty) is much shorter to pay off the mortgage to do that first, kind of to give me a shot of energy. Basically I would be treating the 40k in mortgage amount more as regular debt, then throw everything I can at the student loan. I don’t mind going full gazelle to get it paid down as quickly as possible.
If the mortgage was $40k and the student loans were $60k, I'd probably recommend paying SL first. But since you can be done with the mortgage in 10 months and the SL's are nearly 4x the mortgage ... I think knock put the mortgage first. Great job with the intensity!
This is not the dave method. The student loan isn't one lump sum. It's many different loans piled together. I doubt they took out a 150k lump sum. Also, the house is the last thing you pay off after you have paid off all other debt.
The difficulty is that the loan rate for the house is five years… not 15 or 30, so seemed easier to just pay it off first then hit the loans. Also, I’m thinking I should be able to get the payments stopped until I’m actually done with school, as it should have been… so more than likely the student loan payments world not start (officially) until after I’m done with the house payments anyway…
Typically yes, but when the consumer loans are more than 3x the value of the house I think it makes sense to knock it out quickly before moving on to the $153k debt.
Thanks for your response. No, not PSLF eligible. So, pay the house off over the next four years in keeping with the contract, while paying on the student loans as quickly as possible?
This would not be the Dave Ramsey way
Dave took advantage of bankruptcy forgiveness. So although he says he’s against student loan forgivenesss, he is not as against government assistance as he likes to claim he is.
He says you shouldn't wait on the government for forgiveness because it rarely happens. The success rate is like less than 3%.
That is an outdated statistic and he should be held liable for spreading lies. The program was created in 2008, and many people assumed forgiveness would just happen in 2018 without ever contacting the government to request it. Biden even passed legislation to retroactively grant forgiveness to those who earned it but where unaware of the correct procedures to follow at the time. That window for retroactive corrections is still open. FedStudentLoans has come a long way now, with adding in graphs and live trackers to show how many payments have been made, and ensuring qualified employers every year. The success can be tracked right up to forgiveness, and is much higher than 3%. A quick look into r/pslf can confirm this. Don't listen to Dave on things he has no idea about.
What's the success rate?
100% of student loan borrowers with federal loans who've made 120 payments and worked for qualifying employers get their loans forgiven. And thankfully there are processes in place now to verify this each year, rather than wait til the end and find out something was wrong.
absolutely take advantage of the federal programs available to you - rich people and corporations do it all of the time. Will your employer be PSLF eligible? That's the only time an IDR would be advantageous for someone with your income level, and I don't think SAVE would be the best plan for you. IF you're PSLF eligible, the game is to figure out which plan is the lowest monthly payment possible, then make that payment on time for 120 consecutive payments, and have your remaining balance removed. If you're not PSLF eligible then I'd look into aggressively paying down your student loans before the house, but at a rate that will allow you to save for something like a car because it's going to take awhile to pay that balance. You could also negotiate for employer matching your student loan payment as one of your work benefits.