[27M]
Total Debt:
- STUDENT LOAN: $16,903.75 (6 accounts at roughly 4%) (1/2 way in 4 year after graduation)
- CREDIT CARD: $5,000 @ 0% APR through November 2026
Total Money:
- CHECKING: $11,499.46
- SAVINGS: $5,889.44
- SAVINGS: $1,600
- HYSA: $10,127.20
- HSA 1: $530
- HSA 2: $500
- 401K: $16,945.85
TOTAL: $47,091.95
I bring home roughly $5k after taxes per month. Rent costs $1300 and car $400
Question:
Should I pay off my student loan and credit card now, or let them go as far as I can? Obviously i will pay my CC off by november in full before the 0% changes. I want my SL paid off, but would it be wise to put my money else where?
Should I pay off debt now, or let it cruise?
byu/Independent-Log3092 inpersonalfinance
Posted by Independent-Log3092
11 Comments
You definitely need to pay off the credit card debt before November. You should also consider why you have $5k in credit card debt, unless you already have a good reason for it (for example, you used it for expenses to get rewards or an intro offer and you have a solid plan to pay it off before it begins accruing interest). As for the student loans, are they federal or private loans? You should make sure you have a 3-6 month emergency fund before paying those off because the interest rates are pretty low. You could also consider continuing to pay the minimum and investing the extra money you aren’t putting into the loans, since you’d get a better return on your money by investing long term. It comes down to whether you value mathematics or psychology more.
I would just keep investing and pay off the student loans as time go by. But yeah, pay off that CC off first.
Definitely pay off the credit card balance before the deferred interest hits, and don’t carry a balance on it going forward. I think you’re good to coast on the student loans until they are paid off. The interest rate is relatively low. I would make sure you are making a budget amd setting financial goals (other than paying off debt). Also, if you’re employer offers an employer match to your 401k you are taking full advantage of that.
Simplify your life and pY them all off then start retirement and saving for a down payment
I would pay off the card asap, and keep a buffer for life events (5-10k) then wipe the student loan asap.
4% there are chances you do better in investment, but do you want to risk it vs. Cleaning your situation and create you some emergency money to lower your stress levels ?
Student loan debt is technically more onerous because it’s the one thing you can’t get rid of in bankruptcy, but nothing hurts you financially like carrying a balance on credit cards because the APR is insane. Pay extra as you can on the student loan debt, and make sure you follow through and have the money set aside for the CC payoff. Sometimes you can open a new card and do a balance transfer with 0% interest, so if you’re on top of things it might be possible to pay very little or nothing on the CC debt, but one slip-up and you’ll wish you’d just paid it off.
I had low expenses and a pretty good salary right after college, and I paid off a large chunk of my loans during the first year after graduation. Almost 20 years later, I’m still very glad I did that. My wife didn’t make as much as me, and took an extra year to go through school for health reasons, so we are still paying off her loans. Fortunately, a family member inherited enough to loan us the money to pay them off, and we are paying them back at a very fair interest rate.
I would pay off the credit card first. That has the potential to backfire if you can’t pay it off later. Back in my 20’s I saved up my money, and paid off my student loans in one payment. That was one of the best things I ever did. Now at 51 I don’t think about it. My wife turns 50 in a couple months and she still has $40k in student loans. Get rid of them before you can’t.
It seems to me you could pay off all your debt right now. With your income you’ll build that back up really quickly. Being that free is the best possible position no matter what happens, especially if something changes with your employment. I say pay it all off. This will really set you up to do some escalated savings.
Since you pay 4% on the student loans but get less than that in savings accounts (and the savings account interest that might be 3.35% is also taxable income) I would pay the student loans of ASAP.
More tips:
Start a Roth IRA as well. Reasons? See below.
Best of luck you’re doing awesome at your age!
Key Reasons to Start a Roth IRA in Your 20s:
Tax Advantage: You are likely in a lower tax bracket now than you will be later in your career, allowing you to pay taxes now and avoid higher taxes later.
Decades of Growth: Starting now allows your money to grow for 30–40 years, turning small, early contributions into a large nest egg.
Flexibility: You can withdraw your direct contributions (not earnings) at any time, for any reason, without taxes or penalties.
Lower Taxes: Qualified withdrawals are completely tax-free.
I would max 401k/roth before putting extra to the SL
I have a credit card with 0% interest until January 2027. I am just letting it ride.
You don’t have enough in your savings to just pay off your student loans.
If you currently have a HDHP, then you should maxing out one of your HSA by moving money out of your bank accounts, and into it. Time in the market.
ETA: then move the money in your checking and savings and move it into your HYSA.