Achieving Financial Milestones: Tackling Student Loans and Building Savings
Having recently achieved a significant milestone in my financial journey—completely eliminating all credit card debt—I find myself at a crossroads in terms of financial planning. Over the past months, I have successfully paid off $9,000 across seven credit cards, thanks to disciplined budgeting and the implementation of the snowball method. This triumph, however, leaves me facing my next financial challenge: a $37,000 student loan with Aidvantage.
Currently, the student loan, which accrues between 4-6% interest, is manageable with a monthly payment of $37—courtesy of an income-driven repayment plan. Nevertheless, the small payment barely covers the interest, causing the balance to grow over time.
My financial safety net consists of one month’s worth of expenses stashed in a high-yield savings account, complemented by an equivalent amount in my regular checking account. In addition, I am working to bolster a savings fund for my car (paid off as of June 2023), aiming to dedicate $5,000 solely for unforeseen repairs. Despite this, progress has been slow as I prioritized erasing credit card debt. However, a modest sum is added weekly from my side gigs, such as “Uber” rides for coworkers, which collectively contribute approximately $180 monthly.
Looking ahead, my goal is to expand my emergency fund to $10,000 as swiftly as possible. Yet, I’m torn between aggressively saving and reducing my student loan balance. My lifestyle is quite economical—I reside at home with relatively low expenses, lacking extravagant bills. My income, at $17.50 per hour for a 40-41 hour workweek, nets me around $525-$535 weekly, translating to about $2,100 monthly.
Monthly expenditures are as follows:
– Rent (including car insurance): $300
– Student loans: $37
– Subscriptions: $30
– Groceries: $200
– Toiletries: $80
– Gas: $110
– Phone: $25
– Savings for tax returns: $40
This brings my essential living costs to $822 each month. My financial picture is further enhanced by additional gigs—cleaning, selling items online, babysitting—which funnel directly into savings for my emergency fund and car fund.
Now, the critical question remains: should I concentrate on repaying my student loans, starting with those accruing the highest interest, or prioritize accumulating
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