I still stand by my statement the other day “Personal finance bloggers are a pretty tolerant bunch.” That said, after Dr. Faith shared with me the comments on this Give Me Back My Five Bucks article, I’m learning that personal finance readers, may not be. Krystal bought a new car for $30k and received a verbal beating from several readers. Well, after today, it might be my turn. I welcome the abuse 🙂
I finally have enough money to pay off my student loan…but I have no plans to do so at this point. If you follow my Net Worth updates, you will have noticed I have $5,182 in my checking account and $14,735 in my savings account. Together I have essentially $20,000 liquid. My student loan balance is at $17,867. I could pay off my loan today, and never make another payment to Sallie Mae again. I could, but I wont.
I have had quite the history with Ms. Mae. I started out making double minumum payments, then after some insight from my readers decided to up the ante to at least $1,000 a month. Then just a couple months ago, I got real crazy and decided to throw all of my discretionary income, paying between $1,000 to $2,000, on it each month. It seems that my plans may be changing yet again.
I’m probably going to be decreasing my monthly payment to about $500 each month for the foreseeable future. There are a few reasons I’ve decided to decrease my debt repayments and increase my savings rate.
1) I’m still going through the application process for my dream job and a “final offer” is hopefully not too far away. If I do get the job, then I will be entitled to receive “full” relocation benefits. One of the benefits that comes with this relocation package is aid in purchasing a home (down payment or closing costs). That could be anywhere from $5,000 to $20,000 in free money. The catch is, you only have two years to claim your benefits. That means I could potentially be purchasing a house within three years. I want to build a large cash savings, to give me more flexibility and options, when looking at what house is right for me.
2) I don’t anticipate being single much longer. While there is nothing set in stone with Girl Ninja, I don’t plan to date her for another 4 years. I want to bring a healthy savings account in to the relationship for peace of mind. Having $30K in the bank would make me feel much more at ease.
3) I can always pay off my loan in full with the money I’ve saved. If a year from now I’m not any closer to getting hitched or landing my dream job, I can always pay off my student loan at that time. Sure, I would be paying 7% interest on the $17K over the next year, which would be like throwing away a grand, but I save a crap load of money by, having a roommate, cooking most of my meals, rarely driving, no alcohol, etc. So consider this one of my PERSONAL expenses. You may think I’m crazy for throwing away $80 a month on interest, but people drop far more than that at the bar each month.
4) Most important reason: It’s what I feel like doing right now. I know it may not be the smartest financial decision, but oh well, it’s my choice.
I still plan to pay $500 a month on my student loan, which is more than doubling the minimum payments. Plus, my financial lifestyle is very fluid, so a month from now I could very well be back to hating my loan and paying the sucker off ASAP. I welcome any and all opinions. Am I being a complete moron? What would you do? Although I’m defying Dave Ramsey logic, can you see where I’m coming from? Let me know what you think, good or bad, I have some thick skin 🙂