Student Loan Reimbursement to pay off Credit Cards?

flammenbergeJuly 21, 2006

Hi, I'm new here, and just looking for some financial advice on what to do. A little background, I'm 25 and work full time, making about $36,000 a year. I'm currently getting my masters degree also.

I have about $15,000 in student loans from my B.S degree, and I'll probably rack up another $15,000 for the masters. I currently have about $4900 (give or take a few hundred) in credit card debt that I would really like to get rid of.

The way my school works is, they approve you for an amount more than needed for tuition, and then basically deposit the excess in your checking account. I don't really have to buy books, so I don't need the extra money for that. I thought about saving the excess from the fall semester to put towards next year, so I wouldn't have to take out more loans, but I wanted to see if paying off CC debt was a more viable option. My new loans will have a 6.8% fixed interest rate in about two years (after I'm finished with the degree and the grace period). My current loan has a 2.8% interest rate.

I'm pretty strapped for cash each month, after rent, car payment, car insurance, cable, electric, cell phone... but I cut corners where I can. For instance, I don't have a landline, which saves about $50 a month. But anyway, I do what I can, sending extra money a month to the credit cards (2 of them), but it's a slow process.

Sorry for the ramble, but I'd appreciate any advice. Thanks a bunch!

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jasper_60103

flammenberge,
I've been in your shoes, albeit 21 years ago.
I accumulated about $15K in student loans as well. I paid them off after working full time for a few years. How long have you been working full time? It will be a struggle at first, but it should get easier as you go along. Perhaps a room mate would help lower your monthly espenses?

Financially, it makes since to address the higher interests payments first.
Not sure how much this will help in eliminating any future CC debt though?
You didn't mention your field of study? Anyway, generally a masters degree is a sound investment in your future. I wouldn't let a few grand get in the way of that. Will your employer kick-in some cash towards it?
Just some thoughts.
-jasper

    Bookmark   July 24, 2006 at 9:52AM
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liddy01

I actually did this.

I had about 6k in credit card debt, store charges with 22.9%+ interest rates. I decided to pay those off with my student loan refunds. I calcuated that I would save more than $1,500 a year in interest, plus I have about an extra $300 a month- which now goes to student loans.

However, I have close to 85k in student loan debt. I got my BS- International Affairs and Psychology and MA- Teaching and Technology back to back. So I had no time to pay down my student loans.

Here is a simple way to cut cost of internet and cable. Call and cancel your service and cite some other company can give you a better deal if you start up with them. They won't want to lose your business. I was paying 150 a month for basic cable and high speed internet (need that for work), but after I got it down to 50 a month for the next six months.

Here is a link that might be useful: Article on How to Save

    Bookmark   July 31, 2006 at 10:40PM
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joyfulguy

You don't ask ... you don't get.

Almost every one of you won't feel as though the world has come to an end ...

... if they say, "No".

ole joyful

    Bookmark   August 2, 2006 at 6:57PM
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