Looking for guidance on the best strategy to pay back 60k worth of student loans. I make around 130k a year and bring home around $7200, without accounting for 401k contributions. Given what is happening with loans with the government I want to be smart and just be done with it.
Figuring out a smart repayment strategy
byu/Mountain-Tell-2168 inStudentLoans
Posted by Mountain-Tell-2168
4 Comments
The best strategy is to pay off as much as you can possibly afford outside of your absolute necessities to reduce the amount of interest you pay
I’m in the same boat. If your loans are not consolidated into one loan you will need to review the interest rates and the amount to determine what is mathematially best. In general their are two primary options.
The Snowball method:
**Debt Snowball Method (Motivation-Focused)**
* **How it works:** List your debts in order from the smallest balance to the largest, regardless of interest rate.
* **Action:** Apply all extra funds to the smallest debt while paying minimums on others. Once the smallest debt is paid off, apply its minimum payment to the next smallest debt.
* **Pro:** Provides quick wins and psychological encouragement as debts disappear fast.
* **Con:** You may pay more in interest over time compared to other methods.
The Avalanche method :
**Debt Avalanche Method (Cost-Focused)**
* **How it works:** List your debts in order from the highest interest rate to the lowest.
* **Action:** Direct extra payments toward the debt with the highest interest rate, while maintaining minimum payments on all others. Once that is paid, move to the next highest rate.
* **Pro:** Saves the most money on interest, reducing the total cost of debt repayment.
* **Con:** It may take longer to feel like you are making progress if the highest-interest debt has a large balance
I’m confused about how you are only bringing home $7200 of $130K. Do you have a TON of illegitimate children you’re paying for?
How many years have you been in repayment? If it isn’t a lot, you’ll likely have a required payment large enough to pay off your loans before you get forgiveness unless you are on PSLF.