Question by Mr. Q:
Paying off student loan debt to save money for my newborn?
Okay, so I think i have a plan on how to sort of get out of my student loan debt/save for my newborn.
As of now, I currently owe about $ 21,000 on two federal loans and $ 3800 on one private loan.
I also have a baby due on September 13th. I am 23 years old and just graduated college. I live with my fiance and her parents, so I don’t have any rent to pay.
I am working two part time jobs, and bring home approximately $ 1000 a month, give or take.
My minimum payments are:
$ 210 on a federal loan, $ 100 on other federal loan, and $ 100 on my private loan.
Okay so my plan:
I have about $ 1400 saved in my bank account and $ 1000 in a fire proof box in my bedroom (that is currently my “baby fund”).
I thought about it, and I realized that if I were to pay off my private loan and consolidate my two federal loans, I would have MORE immediate baby money.
I could take my saved $ 2400 and bring my private loan down to $ 1400 in a single payment. And then my goal is to pay that off before my baby is born…which would leave me with 3 payments of $ 467 per month. So in September that loan would be gone. In the mean time I would have my two other loans consolidated, bringing the monthly payment down, at least a little.
While paying off loan: “–>” indicates leftover amount after each month
Private loan: $ 3800 –> $ 1400 –> $ 933 –> $ 467 –> $ 0
Federal loans: $ 21,000 –> minimum payments
Income: $ 1000/mo – $ 467/mo – $ 200/mo = $ 333/mo
This means that while I pay off my private loan (3-4 months), I still have $ 333 a month to save/spend as needed.
Once the private loan is paid off, I will only “need to” pay my minimum consolidated payment ($ 150-$ 200/mo), and have $ 800/mo to save for baby….rather than the original $ 600/mo to save for baby.
***This is simply a plan to get rid of one loan and have enough money for a baby….this is NOT my ‘get our of debt’ plan***
Sorry if it’s confusing….but hopefully it makes sense to you….
Any ideas?? Or would it be smarter to keep my $ 1000 baby fund for the time being?
Yes, your question is really confusing. You need to sit down, focus and get a better handle on it.
Pay off the highest interest first, make more than the minimums on the remaining.
The loans are generating interest, so keeping money in the ‘baby fund’ is costing you money.
Since you’re living with your ‘fiance’ (aka Baby Mama) and her parents, they’ll probably keep supporting you guys. However, if you were to get married (imagine that!), you’d probably qualify for food stamps, WIC and a host of other handouts, which would enrich your ‘baby fund’ significantly.
Go do some more research. You can still live with your new in-laws, but be a more contributing person to the household.
GC
Go to “http://www.clarkhoward.com” and find a radio station near you (or use the website). Call him and ask him this question.