Hey all — looking for some advice on how to best use my cash instead of letting it sit.
Current situation:
– Student loans: ~$74,000 (started at ~$95k last year)
– Cash savings: ~$43,000
– 401k: ~$25,000, do enough for company match.
Expenses:
– Rent: $1,200/month
– No car payment currently, but will likely need a car soon (mine has ~200k miles) worth 3k maybe on marketplace.
Loans:
– $3,800 @ 4.28%
– $5,900 @ 2.5%
– $6,949 @ 3.48%
– $5,540 @ 4.74%
– $32,660 @ 7.8% current payment $598
– $19,900 @ 6.8% current payment $256
On a 10 year plan all federal. When I pay ahead don’t have it count towards next payments. Monthly loan payment is close to $1,100. Have it set on auto pay for 0.25% help on interest.
Main question:
What’s the smartest way to use the $43k? Lump sum toward loans? Keep more cash for a car + emergency fund? Split between investing and paying down debt?
I feel like I’m holding too much cash but don’t want to make a dumb move.
Any input appreciated.
Posted by Flying_Reindeer_
2 Comments
If you have an 3-6 month emergency fund saved up in addition to the cash, I’d knock out at least that 7.8% loan and redirect the nearly $600 payment there to the other loans.
You should be investing (at least) 15-25% of your income for retirement.
In this economy having a 3-6 month, even 12 month emergency fund isn’t bonkers.
You want to have enough cash saved up so that you can obtain a reasonably priced new to you vehicle. https://moneyguy.com/guide/20-3-8-rule/
Once those those priorities have been appropriately addressed allocate extra payments to the loan with the highest interest rate.