What should I do with these next months of no rent?

Submitted by Beta_Decay_ t3_z8xt01 in personalfinance

Thank you in advance for any and all who comment on this post to help!

I am going to be able to live with some family for a few months, maybe a full year of 2023. During this time I was planning on paying off my student loans which is roughly 25k ( 370$ a month for minimum payment) but I was thinking of paying 4.5k monthly to get rid of it. Is it smarter to pay that off (the 25k) or should I save up a down payment for a house and worry about the student debt later? I’d guess I’d roughly save 30-40 k if I don’t use any of it towards student loans.

If it helps I make around 6k a month with my two jobs and I’m pretty frugal with my spending.

TLDR: Please give me some input on the better financial path to follow home ownership first then student loan debt? Or pay of student loans then buy a home.

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potent_dotage t1_iyeaop5 wrote

Situations like this makes following something like Dave Ramsey's Baby Steps nice because you wouldn't even have to think about it: you obviously pay off the loans before you take on a mortgage (although they also have kind of a weird hang-up with moving back in with family sometimes).

The PRIME DIRECTIVE is not always so clear on the best path forward when it comes to student loans that are somewhere in between low and high interest.

One piece of advice I'd feel confident in giving is, if those student loans are federal loans on pause, then it makes sense to just stack up that cash and push the decision down the road. That way you have options later on if you have trouble with your living situation or work situation. You can't undo payments if it turns out you need that money for something else.

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tato9607 t1_iye106f wrote

All depends on your interest rate on the student loans... 2%? Drag out the payments as long as possible, that's free money you can even put in a high yield savings account and make more than the interest charged. 7%? Pay it off, because you're not going to find something that's likely going to have a higher return.

IMPORTANT if you do put it toward your student loans, make sure you have it applied to principal; if that's not an option when you pay, speak with someone at the lending company to make sure that happens.

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Werewolfdad t1_iydusfd wrote

https://www.reddit.com/r/personalfinance/wiki/commontopics

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Beta_Decay_ OP t1_iydvj13 wrote

Is there a higher resolution image for that? I’m trying to view it on my phone and it’s blurry

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Werewolfdad t1_iydvrb5 wrote

https://old.reddit.com/r/personalfinance/comments/co4e7h/better_resolution_flowchart/

https://old.reddit.com/r/personalfinance/comments/x8ymrj/flowchart_revamp_project/

Do either of those work?

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Beta_Decay_ OP t1_iydxqer wrote

Yes, but it doesn’t really answer my question regarding if I should go for a house or pay of the student loans. I do budget well and I have a huge opportunity to save. With housing prices being crazy for renters I’m unsure of what’s better.

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