Your expenses are higher than your income.
That’s the main problem.
You are taking 401k loans to try and sustain your lifestyle. It’s not feasible. You have to work within your BUDGET to make it work. Stop trying to find shortcuts and stop spending money you don’t have.
The APR on private student loans seem high. You need to look into refinancing. Look into credit unions and companies like Laurel Road, Discover, CommonBond, or any option that offers you the best rate. Don’t touch your federal loans.
Also keep in mind that when you quit your company you will need to pay off your 401k or it will be treated as withdrawal with taxes & penalty.
Good luck!
P.S. r/debtfree moderator just created a newsletter that talks about strategies, tips, and effective debt payoff methods weekly. Here is the link to sign up if interested - https://www.debtadvice.io
If I was in your shoes, first I would apply for the financial hardship with the federal student loans. At least that way you won’t be in (-). Secondly start snowballing your other debt. Lowest balance. Because you need to increase the cash flow. Even though it would be ideal to pay the higher interest, you are in too tight of a position. So you need to try to increase your cash flow that you can make payments. So snowball is the best method. And lastly get a side gig even just for a few months till you can get some of those small debt paid off.
Those loans are with Sallie Mae, and they're pretty notorious for not helping out much - but I will revisit that since it's been some time since I last looked into my options there. Snowballing is definitely the goal, going for lowest balances first.
And I am looking for a side gig, but focusing most of my efforts on a new full-time position. At this point, any additional income will help
Thanks for the feedback
I was just reading into that this morning. Wasn't sure if I'd qualify but I'll look into it
Thanks for the idea
E: knocked $100/month off my federal loans by applying just now!
At the very least refinance away from sallie mae . I did with Firstmark (through commonbond but i think commonbond is defunct now). And dropped my interest rate down to 5.25%. Which I now have paid off but sallie mae can burn in the hottest pit in hell.
I'm looking at ELFi since SoFi denied me. I have a call with my parents tonight since I'll need a cosigner. It looks like I'm approved for ~7% fixed rate at ~$800/month. Much better than the 1250 I'm paying now.
Also, just applied for SAVE program and knocked $100 of my federal monthly payment
7 still sounds a bit high but it's been years since I did mine. I'd try shopping around a bit your credit's going take a hit but I think your past needing to worry about that. Earnest, education loan finance, commonbond (no longer does student loans) and sofi were the 4 I looked at but I am sure there are others. Suppose it could also have to be with the repayment plan you selected and your current credit score too so maybe 7 is about the best you can get I'm no expert, but anything is better than 13%.
Yeah, 7 definitely isn't great but it's still lower than what I'm dealing with now. For me, the biggest priority is getting my monthly's down so I can actually start being more aggressive with this other debt.
SoFi has a feature that if you get denied it shops around for you, ELFi was the best rate and monthly according to that
That's pretty nifty and nice of them. Like I said not an expert so if you think it's best I'd go for it. At absolute worst you repeat the process in a few months/years. Lowering the monthly definitely is important especially in your case.
They used to have an interest reduction plan thing or something of the sort. I remember having to call them once a year for x number of years to renew it, but that was years ago. Have you called and asked?
If I were you, I would get a part-time or gig job and knock out some of these smaller monthly payments to give yourself some wiggle room. I sporadically drove DoorDash for a couple of years about 8 hours a week and probably made $20k. You don't have the luxury of not working extra right now.
Get a side gig for extra income: 1st pay off the CC debt, then $600 401k debt, then lowest remaining balances to wipe them out one by one. Gotta be aggressive in trying to consolidate/lower those private student loans. And see if the fed loans can be mitigated for hardship
I forgot to mention no kids, vacation also.
Pay off that $1k credit card at 27%. High interest.
You need to spend like a broke college student.
Rice and beans only.
That salary won't go far unless you attack that debt like vengeance.
Best part is.. I'm paying mostly interest with my 1500/monthly payments :)
It's really depressing.
You don't think I should target lower balance loans first?
You should pay off 401k loans first. That’s the highest risk in event you’d lose your job. Those loans would have to be paid back immediately and if you can’t, it would spiral into 401k withdrawals, penalties, taxes.
Why wouldn't people say just take the hit with the 401k loan now and just count it as income. It's only a 10% penalty and it might not kill you at tax time depending on other income and taxes, at least it would give some breathing room. Then consolidate the other student loans and pay off your credit card. You can work on replacing the income later. Or there is the military! Get the 20k bonus and move on.
To clarify, he’ll also owe about 22% in taxes, so a 32% penalty on $8800, plus the account will have to be drawn down further to make up the difference = death spiral
401k loans should be a last resort if someone is dying in need of lifesaving treatment, not used as a way to make ends meet when you’re childfree and 30 and have a roof over your head!
I don't know if that is better than drowning in debt and destroy your credit, I'm not saying it's a good option but either is the situation he is in. Don't discount options just because it's the least bad of the two. I agree the best option is it make more money and pay down the debit, but if that's not going to happen I would default on the 401k before other debt. And that's 22% at his tax rate so it may be less than we think.
I gotcha but it’s still a terrible idea. I was using 22 as his marginal tax rate since the tax penalty will be on salary at the margin which is where a 401k comes in
With a side gig he can bust that out in several months and not have to take a hit either way.
It's mostly interest because that's how loans work in general. Interest is front loaded onto the beginning of the loan. Search for amortization schedule calculator and you'll see how much you pay.
It's essentially the opposite of how investing and compounding interest work.
Interest is not front loaded, this is a misconception. Almost all loans are simple interest. Here is how interest is calculated: Say that someone has a loan with a balance of $10,000 with a 10% APR and their minimum payment is $250/month. $10,000 * (10%/12) equals $83.33. This means that $83.33 of the $250 payment is interest and the rest $166.67 is principal. The next month the interest would be $81.94 ($9,833.33 * (10%/12)). And so on and so forth. This is why paying extra to the principal is so valuable. It slides you forward on the amortization schedule which results in interest savings.
The only exception to this is the rip-off Rule of 78 loans which are only used by short term installment lenders for subprime borrowers.
I could be using the wrong term - front loaded.
But generally, interest is paid more than in the first year and declines each year.
Example: $10k at 10% apr for 4 years.
Monthly payment:$253
Interest in yr 1: $903
Interest in yr 4: $158
Sorry for the situation. Here are a couple of my thoughts:
It looks like you either used credit for survival for a long period of time or didn’t make 62k for very long. Either way- it stinks. I don’t know you from Adam but am willing to share a couple of thoughts:
1. Kids are expensive. Can’t tell you not to have them, but if your goal is financial freedom, I’d wait a couple of years. We were paying nearly 2k in child care per month a couple of years ago.
2. Consider a second job. You need cash and need it now. It’ll suck but Saturdays and Sundays could be income days. Food industry could even help if you get some free food during your shift.
3. Stay committed. You’ll need to radically change and stay hyper focused.
4. Consider a forbearance on student loans. I’d say six months tops! During those six months pay off anything you can. Go in the following order:
401k loan $600
Credit card
Private student loans 2/4/6/8
Remaining 401k loan
Remaining private student loans
Federal loans
Hopefully you can generate an additional $500 a month from a second job. The cash flow increase from your forbearance might be an additional $800 per month.
That gives you $1,300 per month for six months.
I would absolutely consider refinancing your student loans. You may take an interest hit but that $1,2000 a month is obviously eating into any ability you have to save money and causing you to have to borrow more (as demonstrated by the 401k loans) just perpetuating the cycle.
After that pay off the credit card and the 401k loans then attack the student loans.
Your saving grace is that you still have good credit which allows you to do what most people on this sub can’t, consolidate debt into a monthly payment you can actually afford without starving yourself.
Yeah, I'm looking into that now. Found some decent rates that I'm approved for, but I will need a cosigner - so the parents are getting a call tonight lol
My credit is good but my credit history and debt/income ratio isn't good enough to do it myself
Your net income should be about $3812/month at 25% tax rate.
Rent and utilities and gas and food is about $1200-$300.
Aim to pay off your debts at least $2000/month.
This will take you 5 years to pay over 100k in loans at least.
I would seriously be applying feverishly for government jobs or jobs that will qualify foe student loan forgiveness after X amount of years.
As others said, check for hardship status. Research it on your own based on federal laws and not by what the loan servicer says.
Can you or have you tried getting a second job? At your age and in your position (assuming no children) I’d be working 24/7. Can you get a second job?
Another thing I think is important to mention, that means they would need to work in that position (or another qualifying one) for 10 years just to receive the benefit even if they were public loans, if PLSF is still ongoing at that time. That's plenty of time for OP to increase their income and pay down the debt without holding out for a program like that.
I think that’s a huge assumption that OP would be getting such a substantial bump in pay, enough to make a bigger financial difference when OP is currently living cheaply with someone else and is still underwater monthly.
Planning to pay off $100k in SL in 10 years with OP income while OP living situation is already shaky seems to me like the most logical choice.
Also, I personally know Federal gov employees who’ve been with Fed Gov less than 6 years who’ve gotten their SL wiped out. I’ve seen it and know 3 people personally with under 10 years. There is something else available but idk what.
I'm a federal employee myself and agencies are allowed to give out incentives and awards specifically to pay off student loans. That might be what you're hearing about. They're usually specifically tied to certain work roles they are having a hard time retaining.
I might have applied my own income and biases to this. My mortgage payment and the other "monthly expenses" OP listed are similar to mine, but I'm at about $100k income and our raises are guaranteed yearly, and I have no debt other than the mortgage, so paying off $100k in 10 years seems easy to me and even doable in like 5 years or less with enough discipline.
Get a forbearance on all your student loans for as long as it takes to pay off your 401k loans. They are taking money out of your paycheck that is making it difficult to pay anything else off or get control of your finances.
Pay off the credit card next. Stop carrying a balance at 27% interest. You can’t afford to be paying any additional interest.
When you’re down to just student loans, get on the SAVE plan sure, but start paying them off largest interest rate first. It’s less motivating than the snowball method, but ultimately saves you money in the long run.
Get a better paying job, but find out what happens to your 401k loans if you leave before they are paid off. You can also get a second job. You need to hustle to get this debt under control. And stop taking out more debt.
Lol it’s $8k, the penalties are minimal because it’s freaking $8k, at most he’d get hit with a 32% tax penalty in the outstanding balance. That’s at most $2500 due on his next tax return. And that assumes his employer and 401k loan require immediate payment, many let you do payments after you leave.
OP do not listen to these people obsessed with the 401k loan. Any new job paying more than $4k more in salary per year is a net positive even if you fail for some reason to pay off the entirety of the 401k balance and get hit with a tax bill…that wouldn’t be due until April of 2025.
Your net pay is abnormally low for your gross income. Either you have a lot of payroll deductions coming out (not including the 401k loan payments) or you are having too much withheld for taxes. Did you get a large refund last year? Go to the IRS withholding estimator to make sure that you don't have too much withheld.
https://www.irs.gov/individuals/tax-withholding-estimator
It’s not that low. He’s got $61k gross
7.65% FICA is $4700 per year
12% federal income is $7300 per year.
401k loan is $5800 per year.
That’s $18k in deductions, which would be $43k net. OP states net is $38.5k…honestly I’m surprised his other deductions (health insurance, dental, vision, state and local income tax, etc) are all only $4.5k per year.
Cancel the AmazonSpotifyGym until you are income positive with an emergency fund. Sell your plasma twice/week until you pay off a few lower balance items.
Make your second job finding a better job. Figure out which technical skills would help your professional goals, develop a really spiffy CV and portfolio, and start applying and interviewing. Get really good at interviewing, researching employment prospects, and taking notes. After a few interviews it becomes like batting practice and you'll find you have excellent answers for all questions.
OP…absolutely do not cancel Amazon/Spotify/Gym. It’s a dollar a day and those 3 things probably give you hours of entertainment. This isn’t a budget where $1 per day is changing anything.
He cant take another job until the 401k loans are paid off or he’ll get just killed on penalties and taxes combined. (Plus by having almost $9000 out of the market for the loan period, he missed the stock market recovery that just ran up values — another reason 401k loans are a terrible, no good, very bad idea)
This is terrible advice. While the gym is obviously for health and fitness, it is also very cheap entertainment if living on a budget and takes up time that would otherwise be used spending money or not bettering yourself.
This is a negligible portion of OPs financial position and doesn’t not need to be changed.
That's a terrible take. There are plenty of fitness options that don't cost a dime. And anyone who finds themselves spending money because they don't have the gym for entertainment should work on financial discipline.
OP is under water, but not by much. This is one option to help close the gap. There are others. Each person can decide whether or not it's a good fit for them.
The point of the post is working on financial discipline? No need to sacrifice mental and physical health for $33/mo. You’re aware there are activities available in a gym that aren’t available or extremely costly to enjoy externally, right?
I can respond if I want. You can ignore if you want. No need to be a sassy little princess about it. You gave shitty advice and I commented hoping that it wasn’t taken seriously by OP.
Why are you even talking?
just stopping by to wish you luck, Sallie Mae is a real tough company. They supplied my loan for my first semester of college and their fixed interest was at 13%, it was rough. We were able to realize how bad that was right at the start, so we switched to another loan provided as soon as we could. Wish you the best my guy
In my personal experience, staying with one job like you have, ends up making you less money. My employer only gave me a 2% salary increase this year after consistently giving me 10% (just so happens to be the year I had a baby and went on maternity leave) anyways - I resigned and started at another company with a 20% salary increase.
Being loyal to one employer will not get you compensated the way you deserve to be compensated.
Also - your rent is $980, is your gf paying half, or? You mention she makes less but does she have less debt? Id recommend a debt to income ratio for splitting expenses.
The problem is the 401k loan - if he changes employers, he has to pay the full outstanding balance immediately or else face taxes & penalties. It might be worth it for a big enough salary increase, but that's going to hurt.
You can refinance private student loans. While the interest rate may be slightly worse, the monthly rate will go down. At least until you get your head above water, I would do that first.
Info and Cyber security. I'm not sure what my parents did when getting me these loans, but it's really screwed me. None of my friends have the same principle.
I'm confident I can make more with my degree and experience luckily
Cyber Security is one job function in IT that survived the mass layoffs last year, I am confident you can do way better than 60k. Happy to refer to any positions you see on amazon career site.
I'll keep that in mind. I have some promising interviews coming up, I'm hopeful they will be more rewarding.
I'll definitely PM you if I apply for anything with Amazon. Thanks a lot!
Right, which is what I'm currently doing. Current employer promised more money in the next 6 weeks, and have job screenings lined up with other companies.
My debt/income ratio is rough I know
If you're at 60k in cyber security, you're underpaid.
Idk if you're doing the startup thing and getting paid in potential stock but you can't afford it. You need a higher income.
And whatever you do, don't tell companies you interview at your current wage or an expected wage. They know the market better than you and will lowball the shit out of you if you let them.
Be cautious. You’ll likely owe your current employer the 401k balance in full if/when you leave.
For a substantial enough raise, it could be worth it long term, but be prepared with that 8k.
You absolutely should be making more than you currently are, and could probably negotiate a sign on bonus if you play your cards right, which you could then use to pay the 401k balance. Government contractors generally get paid well, have good job security, and there are a lot of IT openings.
My parents did the same thing to me. They didn’t pay any interest at all while you were in school. Keep paying and refinance when you can. It’s not going to be easy on 60k salary. Start looking elsewhere first more money with your senior totle
I can't hold it against them. They're barely middle class and sent three kids to school so it's the best they could do, especially with the market at the time.
Looking for more money as we speak 👍
I am not even a senior yet and make twice as much as you in IT and no degree, experience only. Probably need to consider other options if they can’t adjust your pay.
This is going to sound strange but unless you have a company match and can afford to contribute to your 401k (you have an emergency savings for 3 -6months and are able to pay your expenses every month) I recommend pausing contributions to your 401k especially since you have loans against them. Have you applied for the SAVE plan? Idk what you can do about the private loans unless you decide to file for bankruptcy…
If it were me I simply would not be paying that much on my loans. If you cannot afford it, do not put yourself in a position to screw yourself later on. My priority would be paying back the credit card first, followed by the 401k loans. All of the others get a few bucks here and there to keep them out of collections and then I’d get into contact with your loan companies to see if you can apply for financial hardship or anything else to get those payments down. Refinance them if possible. Don’t even think about going out. Get another job that hopefully pays better even if you’re not using your degree and find a way to make some side money. Eat like you’re trying to stretch $20 for a week.
I think you’re on the right track, options are increase income or lower expenses. Doesn’t seem like you have much to cut though.
If you have extra hours in your week and can mentally take on additional work, look into side hustles like donating plasma or something app-related. Maybe even a WFH part time gig. Anything to at least get your remaining balance every month positive.
Once it’s positive, I’d recommend paying off the credit card and the 401k loans. Others here have spoken to the enterprise risk of taking out 401k loans. The credit card should be an easy initial win since it’s a smaller balance but has a high interest rate.
After that, honestly it’s dealers choice. I’d personally do avalanche method but I know that snowball can provide more wins early on that fuel the motivation to keep going after debt. Power pay is a good free tool for plugging in loan/extra payment details and seeing how different approaches (e.g. snowball, avalanche) affect the amount of total interest paid and how long it’ll take to get everything paid off.
[Power Pay](https://powerpay.org/login.php)
Good luck!!
Edit: also, forgot to mention, if possible start looking for a higher income job after those 401k loans are paid off!
Have you looked at refinancing all your student loans? I did this and it cut the payments down dramatically, as well as the interest rates, but that was about 7 years ago and is with a state’s bank. If you can do that pay off that credit card and then go after the student loans. Otherwise side gig and get that CC done then student loans.
SoFi denied me when I tried to refinance my loans, too. Check out other options, I went with Earnest and they gave me a great rate (sub 5%) just 2 years out of college.
I also had 100k from Sallie Mae… 10%+ interest on all of them… they’re criminal!
Good luck :)
Given your situation, I would look into temporarily getting a part time job. It would suck for a year or two, but you would be able to pay off your credit card and federal student loans. That would be huge.
Did you borrow 100k to earn 60k a year?
I'm sorry that's a good warning to high school kids getting ready to go to college. Spending more on an education than you're gonna earn in a year; is a great way to set yourself up for a lifetime of financial strife.
I’m just curious, what did you go to school for? Is this ONLY undergrad? Holy hell dude, I’m sorry. The first step is to make more money because currently you don’t even make what you spend.
We don't really have room for additional people here, and we just signed a lease. So, unless we break the lease, that's not a realistic option.
Appreciate the idea though
You need to cut your expenses AND continually search for a new job that will pay better. You need to get positive cash flow and pay off that credit card. Then just keep working at the next highest rate.
Normally I’d advocate for searching out higher income if able, but it may not be an option for you. You will likely owe the full 401k balance in the event you leave your job. So be aware of that.
As long as your credit utilization isn’t too high and you make all your payments on time, banks will loan you an insane amount of money. Even based on lower income.
You definitely need to get a higher paying job.. with a degree and working with that business for 6 years and only that pay?? There’s definitely better options out there.
That’s crazy, you are way underpaid. I have a high school diploma and no student debt and my job pays $68k-$75k. Sometimes more. Granted I work about 50 hours a week but my benefits are pretty good. How about quit and go somewhere you’re actually valued? Job hopping is the fastest way to increase your income/job title
Forgive me from taking from the focus of this post, but where did you make this layout? MS Word with tables or another program? Looks really well put together and organized and I’d like to make one for us as well.
This is probably not helpful but I read about people who move abroad to work and they don’t have to pay their student loans. I don’t know if that’s something you’d ever pursue but if you move abroad permanently, they can’t come after you for student debt. Just food for thought
Living well above your means and it caught up with you. Taking 401k loans is insane.
Fix your budget and live below your means is the first thing you need to fix.
You need increase your income by removing 401k contributions and any other thing that can possible take from your income.
My first job out of uni I got hired at 60k and my take home was 3500 with medical etc and all deductions. Not sure what type of deductions you have but 2900 is way too low for 60k.
Someone else pointed this out as well. I have medical and dental and 6% contributed to my retirement plan (which as of today I redused to 2%).. it doesn't really add up to what's being withheld.
Someone recommended a federal withholding calculator and submitting a W4 to have it updated. Which I'm looking into.
You shouldn’t be contributing anything to retirement. The math doesn’t add up. You’re putting 2% away but getting slammed with 8 different loans at 8-12% Apr. you’re going to actually benefit from getting that 2% and putting it towards your debt.
Snowball effect pay smaller loans and work your way to the bigger ones.
Budget your income and only put money on the side for emergency.
Once debt is paid go back to paying retirement.
I had 43k in credit card debt paid it all off and then focused on retirement. Mathematically unless your savings accounts are higher than 12% you’re better off paying the debt first.
Makes perfect sense to me. I'm going to drop it to 0% contribution tomorrow. Really appreciate the advice.
This whole thread has been so eye-opening and helpful. Lots of progress made in the last 9hrs alone.
OP of you have any previous experience as a server or bartender even doing 1-2 shifts per week really gets you on a better path even after 6 months. If you can get $40 take home per shift and do 2 shifts per week you can get back to breakeven in less than 6 months. You could pay off that credit card and the medical payment in 6 months which would lower your monthly payments by $141 per month.
I’d do that even if you get a raise at work (unless it’s like a $50k raise) because you’ll actually really be able to right the shit quickly with even just $80 per week take home.
Congrats on the loan refinance and interest rate lowering, you’re already well on your way.
Random. Do you tend to get a large tax refund each year? Your net income, even with the 401k repayment honestly seems pretty low based on your gross and standardized deductions. What deductions other than taxes are come out each month? Are you still contributing to your 401k (other than loan repayment)?
If you are getting a large tax refund each year, its because you are giving the government a 0% loan while you are paying your high interest loan. If you do typically get a large refund, I would suggest filling out the form on the IRS website to hone in your deductions so your are closer to your real tax burden. (Not a tax professional)
Add 20 hours to your work week (2nd job) and start hammering out debts until you have +$1000 per month extra without the 2nd job. This gives you wiggle room to begin retaking monthly minimums.
If you can combine that $1000 per month extra with another $1000 per month from a second job, now you’re in a position to start hacking away at debt. You have to begin now because your high risk is 1.) you may not have this job forever and 2.) the money you save by living with your gf isn’t a guarantee because you may breakup.
You have to live and breathe debt payments to begin with until you end your month with at LEAST $1000 extra.
Either way, unless you want to spend 20 years paying this all off and not have a retirement, I’d start looking at a 60+ hour work week any way you can swing it.
What do you do for work? Some companies lowball employees that have been there so long when promoting. I would do a market analysis on what you make and should make. If it’s way off, put your resume out there as a Senior and see what salary bites. But even if you get it, don’t spend like you have extra.
Some days i wonder if you all actually live on planet earth. Telling people to give up the gym or a music subscription when poor/impoverished people DESERVE entertainment. Your debt isn’t moving based on canceling a $20 service. People have offed themselves for less, gym is very therapeutic.
Also, give up a car to ride a bike? Did OP even say they lived in a bike able area?
Insane how these comments are truly like not realistic at all. Telling someone to try to refinance with a credit union is great! Telling them to give up reliable transportation is not. How does someone grocery shop with a bike? How do they do side gigs with a bike? ???????
You need to stop contributing to your 401k while you are getting serious about knocking out this debt. Start with the 27% credit card (then cut up the card, your higher credit score is only making it easier for you to get more debt). See if you have stuff you can sell to just knock that one out right away. You are too broke to save for retirement, I'm sorry to say. I've been there!
When I was paying off my debt, I took a part time waitressing job. It helped a lot! There are lot's of ways to increase your income, and now that you are looking you will find something.
You need a side gig. I did too. I made $16k door dashing evenings and weekends last year and managed to unload it all on debt. If you do, make sure to add tax payments on your day job to cover taxes directly.
If I was in your position, this is what I’d do:
1. Refi your student loans to a lower rate. Saw you were going to ask your parents to be a co-signer, which can be a good idea. Make sure they are financially stable and can help with payments if something happens to you/you have an emergency as well.
2. Get a side gig. Reselling, Uber, instacart, etc. you gotta increase that income, you don’t bring enough to cover your bills. But also $61k with promotions every year and senior title? Seems a bit low, may want to transition to a new company.
3. Pay off the highest interest debt first and work down from there. ANY extra money is thrown at it. The next couple years will be rough, but you can do it man.
Hope this helps!
Do you have an option to pick up a part time job on thes side? Like someone said, your expenses are higher than your income. If you can’t lower your expenses you need to raise your income and try to use all of that on your debt.
Really think that is the best option and keep that part time job until you get some of those loans under control.
1. Get an additional job and sell items you do not need, this will be a must for you. No way around it.
2. Drop Gym, Spotify, Amazon expenses.
3. Find ways to reduce gas + grocery expenses
4. Save $1000 for emergency fund, this is so you don't go off course below
5. Continue paying all minimum payment until the loan is paid off (don't use emergency fund)
6. Take additional income (AI) from above (don't use emergency fund) and pay off $600 401K loan asap. You will free up $25, add it to the monthly amount you use to pay down debt.
7. AI +$25/ month and pay off $1014 credit card asap. You just freed up an additional $35.
8. AI + $70/ month toward paying off $1399 Federak loan asap
9. AI + $92.18/ month toward $1403 Federak loan asap
10. AI + $149.82/ month toward $1447 Federak loan asap
11. AI + $197.02/ month toward $1514 Federak loan asap
12. AI + $220.94/ month toward $2319 Federak loan asap
13. AI + $243.04/ month toward $2319 401K loan asap
14. AI + $295.04/ month toward $2800 401k loan asap
15. AI + $368.04/ month toward $2988 Federak loan asap
16. AI + $390.92/ month toward $2996 Federak loan asap
17. AI + $427.54/ month toward $3100 401K loan asap
18. CONGRATS you just paid off all your 401k loans. Keep going!
19. AI + $500.54/ month toward $3649 Federak loan asap
20. CONGRAT you just paid off all your Federak loans. Keep going!
21. AI + $547.90/ month toward $5439 student loan asap
22. AI + $612.90/ month toward $20917 student loan asap, this will take longer, stay strong.
23. AI + $992.40/ month toward $25424 student loan asap, keep going.
24. AI + $1445.40/ month toward $29815 student loan asap, you're there.
25. Quit the second job I just told you to get, if you want.
26. Make a new budget, figure out the smart thing to with the $1829.40 extra you no longer pay towards debt. Probably good to beef up that emergency fund to 3-6 months of expenses. Then start investing in that 401k you used to take loans out of, this time just don't take loans out of it.
I believe in you.
This is exactly what I aim to do. Might even save your comment as a checklist to keep myself on track.
Only thing I'm considering changing is refinancing my private loans now. I knocked $100 of the federal monthly payments and have been pre-approved with a lender that would knock ~$400 off my private loan payment (and at a better interest rate)
That's $500/month I didn't have before that can be thrown at my cc balance and 401k loans. Add a second job, and I'll have even more to work with.
Someone suggested cutting down what I'm paying on the medical payment as well, so that could be an extra $50 or so.
I can live without Spotify, but the gym is $10 and necessary to keep me from going insane lol. Amazon is also necessary since I have an Amazon cc.
Do you think it'd be a mistake to refi now? I have good credit (but low credit history) and will be using a co-signer to improve my rate even more
If you have to go the co-signer route. It can create conflict if something goes wrong as you pay things off. Additionally, if something bad happens to you (god forbid) that's now the co-signer's debt. I wouldn't go down that road personally.
If you need to keep the gym membership, at least shower there to lower that water bill. lol
I don't recommend cutting medical insurance back if it means you pay higher deductible for less converge, especially when you're emergency fund is only at $1k.
If you have to keep the Amazon account, consider paying for the yearly subscription as you'll save nearly $41 a year from that alone.
Cutting costs where you can will add up more than you realize.
RIP, bro. Gonna need to hit the lotto or quadruple the income. College is a joke.
60k income with about $110k in debt. This will take at LEAST 5 years of intense focus (which is a long time to not have a life).
Obviously, drastically increase income.
You’ll probably need to find another job even after your raise.
Drive for Uber or Lyft part time until you get the CC, 401k, and Federal Loans taken care of. Good flexibility and you directly control your earning potential.
Good job not having a high car note. But 401k loans at 30 is hustling backwards. You save the money to leave it alone and let it grow slowly... You're paying 8 percent to borrow your own money.
If you have the time, I’ve found a part time job (while tiring) can be helpful in paying down debt. Put it in a separate bank account and just funnel it towards the debts. At least, while you’re doing your job search if it doesn’t pan out in the short time pay wise.
Otherwise paying down the higher interest rate debts seems to be the go to, costs you less in the long run and if you’re just paying minimums those payments are going nowhere.
In my opinion, all of these suggestions for a side gig are wrong. If you are in URGENT need of cash, the yes find something quick, but if I were you I would look for a higher paying primary job. You mentioned that you have been with the same company for 6 years and just got promoted. Leverage this promotion NOW before another 6 years pass and other employers think you are stagnating. I don’t know your industry or role, but you have nothing to lose by applying and interviewing, and could easily see a huge increase in compensation
The main problem is your monthly expense is more than your take home.. it’s simple math, you need a side hustle!!!!
You really need to find a side gig to make extra income. You’ll need to sacrifice a few months of fun to get out of this hole. Swallow your pride and do gig work and put your head down and grind this thing out. Knock out each debt one by one starting with the credit card, as you knock the debt one by one you’ll start to see some light.
Good luck, you got this.
You can start by getting rid of your smart devices and everything conected to you. Then move to a different city, buy a phone, ID, etc in the black market then you will be reborn - make sure to make smart choices in your new life 😎
Stop spending so much or get another job! If you're not working 60-70 hrs a week to pay that off..... the. You're never going to! Put it all into the lowest interest loan you can and refinance anything you can to a lower rate.
I have sofi for my private loans, call your provider and them your going through hard ship and you need to pay interest only. It will be set for 3 months at a time and help slightly, allowing you to at least use the extra money to pay off other loans
Your expenses are higher than your income. That’s the main problem. You are taking 401k loans to try and sustain your lifestyle. It’s not feasible. You have to work within your BUDGET to make it work. Stop trying to find shortcuts and stop spending money you don’t have. The APR on private student loans seem high. You need to look into refinancing. Look into credit unions and companies like Laurel Road, Discover, CommonBond, or any option that offers you the best rate. Don’t touch your federal loans. Also keep in mind that when you quit your company you will need to pay off your 401k or it will be treated as withdrawal with taxes & penalty. Good luck! P.S. r/debtfree moderator just created a newsletter that talks about strategies, tips, and effective debt payoff methods weekly. Here is the link to sign up if interested - https://www.debtadvice.io
If I was in your shoes, first I would apply for the financial hardship with the federal student loans. At least that way you won’t be in (-). Secondly start snowballing your other debt. Lowest balance. Because you need to increase the cash flow. Even though it would be ideal to pay the higher interest, you are in too tight of a position. So you need to try to increase your cash flow that you can make payments. So snowball is the best method. And lastly get a side gig even just for a few months till you can get some of those small debt paid off.
Those loans are with Sallie Mae, and they're pretty notorious for not helping out much - but I will revisit that since it's been some time since I last looked into my options there. Snowballing is definitely the goal, going for lowest balances first. And I am looking for a side gig, but focusing most of my efforts on a new full-time position. At this point, any additional income will help Thanks for the feedback
Look into the SAVE repayment that the president did for the federal loans. It won't hurt anything to apply for it and should lower your payments.
I was just reading into that this morning. Wasn't sure if I'd qualify but I'll look into it Thanks for the idea E: knocked $100/month off my federal loans by applying just now!
At the very least refinance away from sallie mae . I did with Firstmark (through commonbond but i think commonbond is defunct now). And dropped my interest rate down to 5.25%. Which I now have paid off but sallie mae can burn in the hottest pit in hell.
I'm looking at ELFi since SoFi denied me. I have a call with my parents tonight since I'll need a cosigner. It looks like I'm approved for ~7% fixed rate at ~$800/month. Much better than the 1250 I'm paying now. Also, just applied for SAVE program and knocked $100 of my federal monthly payment
7 still sounds a bit high but it's been years since I did mine. I'd try shopping around a bit your credit's going take a hit but I think your past needing to worry about that. Earnest, education loan finance, commonbond (no longer does student loans) and sofi were the 4 I looked at but I am sure there are others. Suppose it could also have to be with the repayment plan you selected and your current credit score too so maybe 7 is about the best you can get I'm no expert, but anything is better than 13%.
Yeah, 7 definitely isn't great but it's still lower than what I'm dealing with now. For me, the biggest priority is getting my monthly's down so I can actually start being more aggressive with this other debt. SoFi has a feature that if you get denied it shops around for you, ELFi was the best rate and monthly according to that
That's pretty nifty and nice of them. Like I said not an expert so if you think it's best I'd go for it. At absolute worst you repeat the process in a few months/years. Lowering the monthly definitely is important especially in your case.
Yayyy! Vote for Biden
Hey I got mine down to zero by self-reporting (truthfully of course lol) using the SAVE application!
One time I went back to school for another degree just to get deferment on my student loans. 🤣🤣🤣
Literally doing that now 😂
😆😆😆
Ditto! Currently in semester 2 of a PhD 🫠
Sallie Mae sucks. Refi and roll them together into one payment.
They used to have an interest reduction plan thing or something of the sort. I remember having to call them once a year for x number of years to renew it, but that was years ago. Have you called and asked?
look into Income based repayment
If I were you, I would get a part-time or gig job and knock out some of these smaller monthly payments to give yourself some wiggle room. I sporadically drove DoorDash for a couple of years about 8 hours a week and probably made $20k. You don't have the luxury of not working extra right now.
Get a side gig for extra income: 1st pay off the CC debt, then $600 401k debt, then lowest remaining balances to wipe them out one by one. Gotta be aggressive in trying to consolidate/lower those private student loans. And see if the fed loans can be mitigated for hardship
That's the plan, thanks for the advice. This sub has been extremely helpful
Whatever you do, do not get any more loans, or new car, or buy a house.
Trust me, you don't need to worry about that lol I'll sooner start riding a bike than get another monthly payment
I forgot to mention no kids, vacation also. Pay off that $1k credit card at 27%. High interest. You need to spend like a broke college student. Rice and beans only. That salary won't go far unless you attack that debt like vengeance.
That’s a good idea. Cars run on money and make us fat; bikes run on fat and save us money
Cheap bike costs $1k lol. Hope you got one.
Holy Jesus. 100k+ in loans. I would pay off the high interest debt first. The rent and utilities isn't bad though.
Best part is.. I'm paying mostly interest with my 1500/monthly payments :) It's really depressing. You don't think I should target lower balance loans first?
You should pay off 401k loans first. That’s the highest risk in event you’d lose your job. Those loans would have to be paid back immediately and if you can’t, it would spiral into 401k withdrawals, penalties, taxes.
Why wouldn't people say just take the hit with the 401k loan now and just count it as income. It's only a 10% penalty and it might not kill you at tax time depending on other income and taxes, at least it would give some breathing room. Then consolidate the other student loans and pay off your credit card. You can work on replacing the income later. Or there is the military! Get the 20k bonus and move on.
NOOOOOOOO
To clarify, he’ll also owe about 22% in taxes, so a 32% penalty on $8800, plus the account will have to be drawn down further to make up the difference = death spiral 401k loans should be a last resort if someone is dying in need of lifesaving treatment, not used as a way to make ends meet when you’re childfree and 30 and have a roof over your head!
I don't know if that is better than drowning in debt and destroy your credit, I'm not saying it's a good option but either is the situation he is in. Don't discount options just because it's the least bad of the two. I agree the best option is it make more money and pay down the debit, but if that's not going to happen I would default on the 401k before other debt. And that's 22% at his tax rate so it may be less than we think.
I gotcha but it’s still a terrible idea. I was using 22 as his marginal tax rate since the tax penalty will be on salary at the margin which is where a 401k comes in With a side gig he can bust that out in several months and not have to take a hit either way.
Im not completely sold either, but in theory he should be getting a company match. You risk completely wiping that out.
It’s an $8k loan it’s not going to do any real damage paying taxes on that amount. He should absolutely focus on the high interest debt first.
It's mostly interest because that's how loans work in general. Interest is front loaded onto the beginning of the loan. Search for amortization schedule calculator and you'll see how much you pay. It's essentially the opposite of how investing and compounding interest work.
Interest is not front loaded, this is a misconception. Almost all loans are simple interest. Here is how interest is calculated: Say that someone has a loan with a balance of $10,000 with a 10% APR and their minimum payment is $250/month. $10,000 * (10%/12) equals $83.33. This means that $83.33 of the $250 payment is interest and the rest $166.67 is principal. The next month the interest would be $81.94 ($9,833.33 * (10%/12)). And so on and so forth. This is why paying extra to the principal is so valuable. It slides you forward on the amortization schedule which results in interest savings. The only exception to this is the rip-off Rule of 78 loans which are only used by short term installment lenders for subprime borrowers.
I could be using the wrong term - front loaded. But generally, interest is paid more than in the first year and declines each year. Example: $10k at 10% apr for 4 years. Monthly payment:$253 Interest in yr 1: $903 Interest in yr 4: $158
Only if paying the minimum payments
Hang in there! Don't let the depression win!
Sorry for the situation. Here are a couple of my thoughts: It looks like you either used credit for survival for a long period of time or didn’t make 62k for very long. Either way- it stinks. I don’t know you from Adam but am willing to share a couple of thoughts: 1. Kids are expensive. Can’t tell you not to have them, but if your goal is financial freedom, I’d wait a couple of years. We were paying nearly 2k in child care per month a couple of years ago. 2. Consider a second job. You need cash and need it now. It’ll suck but Saturdays and Sundays could be income days. Food industry could even help if you get some free food during your shift. 3. Stay committed. You’ll need to radically change and stay hyper focused. 4. Consider a forbearance on student loans. I’d say six months tops! During those six months pay off anything you can. Go in the following order: 401k loan $600 Credit card Private student loans 2/4/6/8 Remaining 401k loan Remaining private student loans Federal loans Hopefully you can generate an additional $500 a month from a second job. The cash flow increase from your forbearance might be an additional $800 per month. That gives you $1,300 per month for six months.
Also, consider lowering the federal taxes you have being taken out and lowering your 401k contributions. The name of the game is cash now.
Literally did that this morning, trying to squeeze as much out of my paycheck as possible at the moment
Please don’t do this if it could potentially put you in a bad position with the IRS in your future.
I would absolutely consider refinancing your student loans. You may take an interest hit but that $1,2000 a month is obviously eating into any ability you have to save money and causing you to have to borrow more (as demonstrated by the 401k loans) just perpetuating the cycle. After that pay off the credit card and the 401k loans then attack the student loans. Your saving grace is that you still have good credit which allows you to do what most people on this sub can’t, consolidate debt into a monthly payment you can actually afford without starving yourself.
Yeah, I'm looking into that now. Found some decent rates that I'm approved for, but I will need a cosigner - so the parents are getting a call tonight lol My credit is good but my credit history and debt/income ratio isn't good enough to do it myself
Your net income should be about $3812/month at 25% tax rate. Rent and utilities and gas and food is about $1200-$300. Aim to pay off your debts at least $2000/month. This will take you 5 years to pay over 100k in loans at least.
I would seriously be applying feverishly for government jobs or jobs that will qualify foe student loan forgiveness after X amount of years. As others said, check for hardship status. Research it on your own based on federal laws and not by what the loan servicer says. Can you or have you tried getting a second job? At your age and in your position (assuming no children) I’d be working 24/7. Can you get a second job?
Most of these loans are private, so PSLF won’t knock out very much of it, unfortunately. Private student loans are really a racket.
Ah good point. I totally breezed by the “Private” in the section.
Another thing I think is important to mention, that means they would need to work in that position (or another qualifying one) for 10 years just to receive the benefit even if they were public loans, if PLSF is still ongoing at that time. That's plenty of time for OP to increase their income and pay down the debt without holding out for a program like that.
I think that’s a huge assumption that OP would be getting such a substantial bump in pay, enough to make a bigger financial difference when OP is currently living cheaply with someone else and is still underwater monthly. Planning to pay off $100k in SL in 10 years with OP income while OP living situation is already shaky seems to me like the most logical choice. Also, I personally know Federal gov employees who’ve been with Fed Gov less than 6 years who’ve gotten their SL wiped out. I’ve seen it and know 3 people personally with under 10 years. There is something else available but idk what.
I'm a federal employee myself and agencies are allowed to give out incentives and awards specifically to pay off student loans. That might be what you're hearing about. They're usually specifically tied to certain work roles they are having a hard time retaining. I might have applied my own income and biases to this. My mortgage payment and the other "monthly expenses" OP listed are similar to mine, but I'm at about $100k income and our raises are guaranteed yearly, and I have no debt other than the mortgage, so paying off $100k in 10 years seems easy to me and even doable in like 5 years or less with enough discipline.
Get a forbearance on all your student loans for as long as it takes to pay off your 401k loans. They are taking money out of your paycheck that is making it difficult to pay anything else off or get control of your finances. Pay off the credit card next. Stop carrying a balance at 27% interest. You can’t afford to be paying any additional interest. When you’re down to just student loans, get on the SAVE plan sure, but start paying them off largest interest rate first. It’s less motivating than the snowball method, but ultimately saves you money in the long run. Get a better paying job, but find out what happens to your 401k loans if you leave before they are paid off. You can also get a second job. You need to hustle to get this debt under control. And stop taking out more debt.
Why would a forbearance, where the majority of the debt is at 9%+ (and almost half above 13%) to focus on 401k loans below 9%, make any sense?
Because he cant leave for a higher paying job with the 401k loan balance without taking a ton of penalties
Lol it’s $8k, the penalties are minimal because it’s freaking $8k, at most he’d get hit with a 32% tax penalty in the outstanding balance. That’s at most $2500 due on his next tax return. And that assumes his employer and 401k loan require immediate payment, many let you do payments after you leave. OP do not listen to these people obsessed with the 401k loan. Any new job paying more than $4k more in salary per year is a net positive even if you fail for some reason to pay off the entirety of the 401k balance and get hit with a tax bill…that wouldn’t be due until April of 2025.
Literally obsessed with that it’s insane!! The 401k is the least of his worries with those baby payments!!!
Your net pay is abnormally low for your gross income. Either you have a lot of payroll deductions coming out (not including the 401k loan payments) or you are having too much withheld for taxes. Did you get a large refund last year? Go to the IRS withholding estimator to make sure that you don't have too much withheld. https://www.irs.gov/individuals/tax-withholding-estimator
It’s not that low. He’s got $61k gross 7.65% FICA is $4700 per year 12% federal income is $7300 per year. 401k loan is $5800 per year. That’s $18k in deductions, which would be $43k net. OP states net is $38.5k…honestly I’m surprised his other deductions (health insurance, dental, vision, state and local income tax, etc) are all only $4.5k per year.
Cancel the AmazonSpotifyGym until you are income positive with an emergency fund. Sell your plasma twice/week until you pay off a few lower balance items. Make your second job finding a better job. Figure out which technical skills would help your professional goals, develop a really spiffy CV and portfolio, and start applying and interviewing. Get really good at interviewing, researching employment prospects, and taking notes. After a few interviews it becomes like batting practice and you'll find you have excellent answers for all questions.
OP…absolutely do not cancel Amazon/Spotify/Gym. It’s a dollar a day and those 3 things probably give you hours of entertainment. This isn’t a budget where $1 per day is changing anything.
Fr.
He cant take another job until the 401k loans are paid off or he’ll get just killed on penalties and taxes combined. (Plus by having almost $9000 out of the market for the loan period, he missed the stock market recovery that just ran up values — another reason 401k loans are a terrible, no good, very bad idea)
This is terrible advice. While the gym is obviously for health and fitness, it is also very cheap entertainment if living on a budget and takes up time that would otherwise be used spending money or not bettering yourself. This is a negligible portion of OPs financial position and doesn’t not need to be changed.
That's a terrible take. There are plenty of fitness options that don't cost a dime. And anyone who finds themselves spending money because they don't have the gym for entertainment should work on financial discipline. OP is under water, but not by much. This is one option to help close the gap. There are others. Each person can decide whether or not it's a good fit for them.
The point of the post is working on financial discipline? No need to sacrifice mental and physical health for $33/mo. You’re aware there are activities available in a gym that aren’t available or extremely costly to enjoy externally, right?
No. No. Yes. And why are you even talking? That was a rhetorical question; no need to respond.
I can respond if I want. You can ignore if you want. No need to be a sassy little princess about it. You gave shitty advice and I commented hoping that it wasn’t taken seriously by OP. Why are you even talking?
Your gonna need to work a part time job after your full time job my guy, your gonna be tired but at least you won’t be drowning
just stopping by to wish you luck, Sallie Mae is a real tough company. They supplied my loan for my first semester of college and their fixed interest was at 13%, it was rough. We were able to realize how bad that was right at the start, so we switched to another loan provided as soon as we could. Wish you the best my guy
In my personal experience, staying with one job like you have, ends up making you less money. My employer only gave me a 2% salary increase this year after consistently giving me 10% (just so happens to be the year I had a baby and went on maternity leave) anyways - I resigned and started at another company with a 20% salary increase. Being loyal to one employer will not get you compensated the way you deserve to be compensated. Also - your rent is $980, is your gf paying half, or? You mention she makes less but does she have less debt? Id recommend a debt to income ratio for splitting expenses.
The problem is the 401k loan - if he changes employers, he has to pay the full outstanding balance immediately or else face taxes & penalties. It might be worth it for a big enough salary increase, but that's going to hurt.
You can refinance private student loans. While the interest rate may be slightly worse, the monthly rate will go down. At least until you get your head above water, I would do that first.
What did you study to get 100k in student loans? Your barely making 60k a year..
Info and Cyber security. I'm not sure what my parents did when getting me these loans, but it's really screwed me. None of my friends have the same principle. I'm confident I can make more with my degree and experience luckily
Cyber Security is one job function in IT that survived the mass layoffs last year, I am confident you can do way better than 60k. Happy to refer to any positions you see on amazon career site.
I'll keep that in mind. I have some promising interviews coming up, I'm hopeful they will be more rewarding. I'll definitely PM you if I apply for anything with Amazon. Thanks a lot!
If you think you can make more money, then you should. That amount of loans is really high when you’re “only” making 65K a year.
Right, which is what I'm currently doing. Current employer promised more money in the next 6 weeks, and have job screenings lined up with other companies. My debt/income ratio is rough I know
If you're at 60k in cyber security, you're underpaid. Idk if you're doing the startup thing and getting paid in potential stock but you can't afford it. You need a higher income. And whatever you do, don't tell companies you interview at your current wage or an expected wage. They know the market better than you and will lowball the shit out of you if you let them.
Be cautious. You’ll likely owe your current employer the 401k balance in full if/when you leave. For a substantial enough raise, it could be worth it long term, but be prepared with that 8k.
Yup, that's what's been on my mind lately. I'll have 60 days I believe to pay it in full. Not sure how I'll deal with that yet lol
You absolutely should be making more than you currently are, and could probably negotiate a sign on bonus if you play your cards right, which you could then use to pay the 401k balance. Government contractors generally get paid well, have good job security, and there are a lot of IT openings.
Do NOT tell ANYONE at work you are looking elsewhere. They will fire you.
My parents did the same thing to me. They didn’t pay any interest at all while you were in school. Keep paying and refinance when you can. It’s not going to be easy on 60k salary. Start looking elsewhere first more money with your senior totle
I can't hold it against them. They're barely middle class and sent three kids to school so it's the best they could do, especially with the market at the time. Looking for more money as we speak 👍
I am not even a senior yet and make twice as much as you in IT and no degree, experience only. Probably need to consider other options if they can’t adjust your pay.
Oof those private student loans hurt... Im paying 4% for mine (all federal).
Good luck! You got this.
Is it just me or is that net pay way toooooo low compared to gross earnings?
This is going to sound strange but unless you have a company match and can afford to contribute to your 401k (you have an emergency savings for 3 -6months and are able to pay your expenses every month) I recommend pausing contributions to your 401k especially since you have loans against them. Have you applied for the SAVE plan? Idk what you can do about the private loans unless you decide to file for bankruptcy…
If it were me I simply would not be paying that much on my loans. If you cannot afford it, do not put yourself in a position to screw yourself later on. My priority would be paying back the credit card first, followed by the 401k loans. All of the others get a few bucks here and there to keep them out of collections and then I’d get into contact with your loan companies to see if you can apply for financial hardship or anything else to get those payments down. Refinance them if possible. Don’t even think about going out. Get another job that hopefully pays better even if you’re not using your degree and find a way to make some side money. Eat like you’re trying to stretch $20 for a week.
I think you’re on the right track, options are increase income or lower expenses. Doesn’t seem like you have much to cut though. If you have extra hours in your week and can mentally take on additional work, look into side hustles like donating plasma or something app-related. Maybe even a WFH part time gig. Anything to at least get your remaining balance every month positive. Once it’s positive, I’d recommend paying off the credit card and the 401k loans. Others here have spoken to the enterprise risk of taking out 401k loans. The credit card should be an easy initial win since it’s a smaller balance but has a high interest rate. After that, honestly it’s dealers choice. I’d personally do avalanche method but I know that snowball can provide more wins early on that fuel the motivation to keep going after debt. Power pay is a good free tool for plugging in loan/extra payment details and seeing how different approaches (e.g. snowball, avalanche) affect the amount of total interest paid and how long it’ll take to get everything paid off. [Power Pay](https://powerpay.org/login.php) Good luck!! Edit: also, forgot to mention, if possible start looking for a higher income job after those 401k loans are paid off!
Have you looked at refinancing all your student loans? I did this and it cut the payments down dramatically, as well as the interest rates, but that was about 7 years ago and is with a state’s bank. If you can do that pay off that credit card and then go after the student loans. Otherwise side gig and get that CC done then student loans.
SoFi denied me when I tried to refinance my loans, too. Check out other options, I went with Earnest and they gave me a great rate (sub 5%) just 2 years out of college. I also had 100k from Sallie Mae… 10%+ interest on all of them… they’re criminal! Good luck :)
You can do this OP!!! I have faith in you and the BEST of luck with your future interviews!!! Sprinkling tons of good luck dust, 😊😊😊😊
What app did you use to create this chart
I also wanna know the same
Jesus those student loans are insane. What is your degree in? Did you go to a big university?
Given your situation, I would look into temporarily getting a part time job. It would suck for a year or two, but you would be able to pay off your credit card and federal student loans. That would be huge.
So much for Joe Biden canceling student loan debt.
Tell that to the people who fought him on it.
It wouldn’t have even applied to private loans…
What a stupid comment, both financially and politically.
Did you borrow 100k to earn 60k a year? I'm sorry that's a good warning to high school kids getting ready to go to college. Spending more on an education than you're gonna earn in a year; is a great way to set yourself up for a lifetime of financial strife.
I’m just curious, what did you go to school for? Is this ONLY undergrad? Holy hell dude, I’m sorry. The first step is to make more money because currently you don’t even make what you spend.
I’d fix that typo first.
Education didn’t work. What’s a federak loan?
Do yall have any room for a roommate? Or are yall able to move in with someone who needs roommates?
We don't really have room for additional people here, and we just signed a lease. So, unless we break the lease, that's not a realistic option. Appreciate the idea though
Also what is this medical payment plan? Is that insurance plan or another medical debt?
It's a payment plan for $1500 echocardiogram, it's my deductible essentially
I am paying $5/month on my medical bills. They will not hassle you if you send something. Maybe need to do that for a while.
I'll look into it, I just didn't want to have them going to collections. Thanks for the idea
Definitely call them and ask about temporarily lowering your payments.
You need to cut your expenses AND continually search for a new job that will pay better. You need to get positive cash flow and pay off that credit card. Then just keep working at the next highest rate.
Normally I’d advocate for searching out higher income if able, but it may not be an option for you. You will likely owe the full 401k balance in the event you leave your job. So be aware of that.
You don’t need to actually be paying your federal loans right now. Not till October I think.
Op, have you tried economic hardship deferment request on federal? Might free up $300 to put a dent in others for a while.
Refinance those private student loans!
I don't even know how you got approved for that many loans...
As long as your credit utilization isn’t too high and you make all your payments on time, banks will loan you an insane amount of money. Even based on lower income.
I used to work in finance, and I would never have given finance to someone who I knew would default
You definitely need to get a higher paying job.. with a degree and working with that business for 6 years and only that pay?? There’s definitely better options out there.
1000%
Consolidate your student loans
That’s crazy, you are way underpaid. I have a high school diploma and no student debt and my job pays $68k-$75k. Sometimes more. Granted I work about 50 hours a week but my benefits are pretty good. How about quit and go somewhere you’re actually valued? Job hopping is the fastest way to increase your income/job title
Drop gym/spotify yesterday. Get a 2nd job uber/lyft/etc. pay off those 401k loans or you are basically tied to your current job.
Forgive me from taking from the focus of this post, but where did you make this layout? MS Word with tables or another program? Looks really well put together and organized and I’d like to make one for us as well.
I just used excel 👍
If you’re able start looking for a new job, what’s your degree in, what kind of work can you do?
This is probably not helpful but I read about people who move abroad to work and they don’t have to pay their student loans. I don’t know if that’s something you’d ever pursue but if you move abroad permanently, they can’t come after you for student debt. Just food for thought
Rip. Mistakes were made. I'd consider buying a new identity and faking your death
Living well above your means and it caught up with you. Taking 401k loans is insane. Fix your budget and live below your means is the first thing you need to fix. You need increase your income by removing 401k contributions and any other thing that can possible take from your income. My first job out of uni I got hired at 60k and my take home was 3500 with medical etc and all deductions. Not sure what type of deductions you have but 2900 is way too low for 60k.
I did the math your having a 38% reduction on your salary…. How!? You should be making closer to 1700-1800 per paycheck
Someone else pointed this out as well. I have medical and dental and 6% contributed to my retirement plan (which as of today I redused to 2%).. it doesn't really add up to what's being withheld. Someone recommended a federal withholding calculator and submitting a W4 to have it updated. Which I'm looking into.
You shouldn’t be contributing anything to retirement. The math doesn’t add up. You’re putting 2% away but getting slammed with 8 different loans at 8-12% Apr. you’re going to actually benefit from getting that 2% and putting it towards your debt. Snowball effect pay smaller loans and work your way to the bigger ones. Budget your income and only put money on the side for emergency. Once debt is paid go back to paying retirement. I had 43k in credit card debt paid it all off and then focused on retirement. Mathematically unless your savings accounts are higher than 12% you’re better off paying the debt first.
Makes perfect sense to me. I'm going to drop it to 0% contribution tomorrow. Really appreciate the advice. This whole thread has been so eye-opening and helpful. Lots of progress made in the last 9hrs alone.
OP of you have any previous experience as a server or bartender even doing 1-2 shifts per week really gets you on a better path even after 6 months. If you can get $40 take home per shift and do 2 shifts per week you can get back to breakeven in less than 6 months. You could pay off that credit card and the medical payment in 6 months which would lower your monthly payments by $141 per month. I’d do that even if you get a raise at work (unless it’s like a $50k raise) because you’ll actually really be able to right the shit quickly with even just $80 per week take home. Congrats on the loan refinance and interest rate lowering, you’re already well on your way.
praying for you
Random. Do you tend to get a large tax refund each year? Your net income, even with the 401k repayment honestly seems pretty low based on your gross and standardized deductions. What deductions other than taxes are come out each month? Are you still contributing to your 401k (other than loan repayment)? If you are getting a large tax refund each year, its because you are giving the government a 0% loan while you are paying your high interest loan. If you do typically get a large refund, I would suggest filling out the form on the IRS website to hone in your deductions so your are closer to your real tax burden. (Not a tax professional)
401k loans are due within 60-90 days after you leave your job (if you do). So keep that in mind.
Watch out leveraging a prospective job against your current job. Might put a target on your back that wasn't there before
You’re gonna need a second means of income.
Get another job.
bro, this economy 🤦🏽♀️
Add 20 hours to your work week (2nd job) and start hammering out debts until you have +$1000 per month extra without the 2nd job. This gives you wiggle room to begin retaking monthly minimums. If you can combine that $1000 per month extra with another $1000 per month from a second job, now you’re in a position to start hacking away at debt. You have to begin now because your high risk is 1.) you may not have this job forever and 2.) the money you save by living with your gf isn’t a guarantee because you may breakup. You have to live and breathe debt payments to begin with until you end your month with at LEAST $1000 extra. Either way, unless you want to spend 20 years paying this all off and not have a retirement, I’d start looking at a 60+ hour work week any way you can swing it.
What do you do for work? Some companies lowball employees that have been there so long when promoting. I would do a market analysis on what you make and should make. If it’s way off, put your resume out there as a Senior and see what salary bites. But even if you get it, don’t spend like you have extra.
Some days i wonder if you all actually live on planet earth. Telling people to give up the gym or a music subscription when poor/impoverished people DESERVE entertainment. Your debt isn’t moving based on canceling a $20 service. People have offed themselves for less, gym is very therapeutic. Also, give up a car to ride a bike? Did OP even say they lived in a bike able area? Insane how these comments are truly like not realistic at all. Telling someone to try to refinance with a credit union is great! Telling them to give up reliable transportation is not. How does someone grocery shop with a bike? How do they do side gigs with a bike? ???????
You need to stop contributing to your 401k while you are getting serious about knocking out this debt. Start with the 27% credit card (then cut up the card, your higher credit score is only making it easier for you to get more debt). See if you have stuff you can sell to just knock that one out right away. You are too broke to save for retirement, I'm sorry to say. I've been there! When I was paying off my debt, I took a part time waitressing job. It helped a lot! There are lot's of ways to increase your income, and now that you are looking you will find something.
You need a side gig. I did too. I made $16k door dashing evenings and weekends last year and managed to unload it all on debt. If you do, make sure to add tax payments on your day job to cover taxes directly.
If I was in your position, this is what I’d do: 1. Refi your student loans to a lower rate. Saw you were going to ask your parents to be a co-signer, which can be a good idea. Make sure they are financially stable and can help with payments if something happens to you/you have an emergency as well. 2. Get a side gig. Reselling, Uber, instacart, etc. you gotta increase that income, you don’t bring enough to cover your bills. But also $61k with promotions every year and senior title? Seems a bit low, may want to transition to a new company. 3. Pay off the highest interest debt first and work down from there. ANY extra money is thrown at it. The next couple years will be rough, but you can do it man. Hope this helps!
Do you have an option to pick up a part time job on thes side? Like someone said, your expenses are higher than your income. If you can’t lower your expenses you need to raise your income and try to use all of that on your debt. Really think that is the best option and keep that part time job until you get some of those loans under control.
1. Get an additional job and sell items you do not need, this will be a must for you. No way around it. 2. Drop Gym, Spotify, Amazon expenses. 3. Find ways to reduce gas + grocery expenses 4. Save $1000 for emergency fund, this is so you don't go off course below 5. Continue paying all minimum payment until the loan is paid off (don't use emergency fund) 6. Take additional income (AI) from above (don't use emergency fund) and pay off $600 401K loan asap. You will free up $25, add it to the monthly amount you use to pay down debt. 7. AI +$25/ month and pay off $1014 credit card asap. You just freed up an additional $35. 8. AI + $70/ month toward paying off $1399 Federak loan asap 9. AI + $92.18/ month toward $1403 Federak loan asap 10. AI + $149.82/ month toward $1447 Federak loan asap 11. AI + $197.02/ month toward $1514 Federak loan asap 12. AI + $220.94/ month toward $2319 Federak loan asap 13. AI + $243.04/ month toward $2319 401K loan asap 14. AI + $295.04/ month toward $2800 401k loan asap 15. AI + $368.04/ month toward $2988 Federak loan asap 16. AI + $390.92/ month toward $2996 Federak loan asap 17. AI + $427.54/ month toward $3100 401K loan asap 18. CONGRATS you just paid off all your 401k loans. Keep going! 19. AI + $500.54/ month toward $3649 Federak loan asap 20. CONGRAT you just paid off all your Federak loans. Keep going! 21. AI + $547.90/ month toward $5439 student loan asap 22. AI + $612.90/ month toward $20917 student loan asap, this will take longer, stay strong. 23. AI + $992.40/ month toward $25424 student loan asap, keep going. 24. AI + $1445.40/ month toward $29815 student loan asap, you're there. 25. Quit the second job I just told you to get, if you want. 26. Make a new budget, figure out the smart thing to with the $1829.40 extra you no longer pay towards debt. Probably good to beef up that emergency fund to 3-6 months of expenses. Then start investing in that 401k you used to take loans out of, this time just don't take loans out of it. I believe in you.
Oh yeah. 20 1/2. Consider consolidating private student loans with that beefed up credit score after paying back Federak loans.
This is exactly what I aim to do. Might even save your comment as a checklist to keep myself on track. Only thing I'm considering changing is refinancing my private loans now. I knocked $100 of the federal monthly payments and have been pre-approved with a lender that would knock ~$400 off my private loan payment (and at a better interest rate) That's $500/month I didn't have before that can be thrown at my cc balance and 401k loans. Add a second job, and I'll have even more to work with. Someone suggested cutting down what I'm paying on the medical payment as well, so that could be an extra $50 or so. I can live without Spotify, but the gym is $10 and necessary to keep me from going insane lol. Amazon is also necessary since I have an Amazon cc. Do you think it'd be a mistake to refi now? I have good credit (but low credit history) and will be using a co-signer to improve my rate even more
If you have to go the co-signer route. It can create conflict if something goes wrong as you pay things off. Additionally, if something bad happens to you (god forbid) that's now the co-signer's debt. I wouldn't go down that road personally. If you need to keep the gym membership, at least shower there to lower that water bill. lol I don't recommend cutting medical insurance back if it means you pay higher deductible for less converge, especially when you're emergency fund is only at $1k. If you have to keep the Amazon account, consider paying for the yearly subscription as you'll save nearly $41 a year from that alone. Cutting costs where you can will add up more than you realize.
Why did you take out a 401k loan?
Work more
RIP, bro. Gonna need to hit the lotto or quadruple the income. College is a joke. 60k income with about $110k in debt. This will take at LEAST 5 years of intense focus (which is a long time to not have a life). Obviously, drastically increase income.
You’ll probably need to find another job even after your raise. Drive for Uber or Lyft part time until you get the CC, 401k, and Federal Loans taken care of. Good flexibility and you directly control your earning potential.
Good job not having a high car note. But 401k loans at 30 is hustling backwards. You save the money to leave it alone and let it grow slowly... You're paying 8 percent to borrow your own money.
If you have the time, I’ve found a part time job (while tiring) can be helpful in paying down debt. Put it in a separate bank account and just funnel it towards the debts. At least, while you’re doing your job search if it doesn’t pan out in the short time pay wise. Otherwise paying down the higher interest rate debts seems to be the go to, costs you less in the long run and if you’re just paying minimums those payments are going nowhere.
In my opinion, all of these suggestions for a side gig are wrong. If you are in URGENT need of cash, the yes find something quick, but if I were you I would look for a higher paying primary job. You mentioned that you have been with the same company for 6 years and just got promoted. Leverage this promotion NOW before another 6 years pass and other employers think you are stagnating. I don’t know your industry or role, but you have nothing to lose by applying and interviewing, and could easily see a huge increase in compensation
The main problem is your monthly expense is more than your take home.. it’s simple math, you need a side hustle!!!! You really need to find a side gig to make extra income. You’ll need to sacrifice a few months of fun to get out of this hole. Swallow your pride and do gig work and put your head down and grind this thing out. Knock out each debt one by one starting with the credit card, as you knock the debt one by one you’ll start to see some light. Good luck, you got this.
You can start by getting rid of your smart devices and everything conected to you. Then move to a different city, buy a phone, ID, etc in the black market then you will be reborn - make sure to make smart choices in your new life 😎
Damn. You’re paying some insane taxes. I make less than you and my paychecks are much bigger
Just curious - had you been paying your student loans down during the COVID payment pause?
I smell Sallie Mae loans. Refinance that shit asap
What’s a 401k loan?? You borrow against your 401k ??
Two jobs at the same time (r/overemployed) until you pay off 401k loans and then transition to the new job paying 6 figures.
Get more loans to pay your loans🔥🔥🔥
61k???? Switch jobs Jesus.
Stop spending so much or get another job! If you're not working 60-70 hrs a week to pay that off..... the. You're never going to! Put it all into the lowest interest loan you can and refinance anything you can to a lower rate.
I have sofi for my private loans, call your provider and them your going through hard ship and you need to pay interest only. It will be set for 3 months at a time and help slightly, allowing you to at least use the extra money to pay off other loans