Timing Dilemma
I need to write this out only because I have a timing problem that I'm dealing with. Here is the situation: 1. I have a $75,000 loan that needs to be paid within 5 years, which is more than conservative. 2. I need to finish college which will be a year and a half to two of those 5 years. Then I will be at my dream job doing what I always wanted to be doing in the first place. 3. We need to concieve a child in the 5 year time frame and time it, so that I will be able to watch the child at home during my college days. That way both myself and my spouse will have time to interact with our child. 4. I need to save enough money in my emergency fund to cover expenses while living off one salary, one set of benefits for our family for 1-2 years. 5. Because my existing student loans will be deferred whilst in college, I dont have to worry about paying back the expense right now. However, I do need to know if I should be accumulating more student loans to pay back later or to save enough and risk our emergency fund on ~$12,000 tuition at the university? This would equal with my current loan of ~$5,500 to $17,000... plus my spouses existing student loan of $16,000 which will bring it to $33,000. 6. We need to purchase a new home in 5-7 years because our family will be growing. Our current home equity is at $50,000 but I wouldn't doubt that it would sell higher. 7. We need to fix up the house that we are currently in. We have updated the kitchen and are currently working on a budget to fix our fence and add new insulation to the attic. 8. My job is currently very unstable and I wish not to participate in it forever. My youth is slipping away at 25 and I need to get on my track to enjoy my working days. After that, I will be content to work for approximately 25-30 years depending on savings ect. 9. Savings, 401k and Roth IRAs will have to still have contributions b/c I cant neglect this but with a one person salary it may be difficult. Im thinking while going to full time school and watching our newborn, that i will have time to have a small part time job??? 10. My time frame is 5 years, 6 years Max. What to do? :/
9:12 AM
1 Comments:
A fellow blogger's insight:
Aelstro said...
I couldn't find a place to post a comment on his blog, but here is the advice I would give.
1. Student loan debt is cheap debt. Rates when I graduated were around 3% and if you make payments (kwikpay) on time you can drop off another 1% or so. That means that a 7 year loan of 70,000 would only increase by $1,400 by the time you payed it off. It's hard to beat that
2. He'll need the $12,000 for a downpayment, or for medical deductibles or to live off of if the job doesn't come throuhg immediately. Spending reserves is a bad idea
3. The housing market is now a higher percentage of GDP than the Tech sector was when its bubble burst (http://www.businessweek.com/the_thread/economicsunbound/archives/2005/12/bigger_than_the.html?campaign_id=rss_blog_economicsunbound)
So I'm pretty sure that houses will be as cheap or cheaper in 5 years when the growing family is an actual concern.
Student loans also build up credit (if payed promptly) faster than credit cards so if you have student debt and pay it regularly it will help you get the house in the long run.
Go with the loans, worry about the house when you need it, and NEVER use up your life savings
11:36 AM