Graduated Learning: Life after College

I got my degree, I got a job…now what?

Personal Finance Stagnation June 13, 2010

Filed under: Personal Finance — Stephanie @ 1:59 pm

If you’re a current reader of my blog, you know that I’m not the most prolific blogger.  I post whenever something (financial or otherwise) happens, or when an idea strikes me.  And so I guess my life has been boring, and I have no new ideas?  No, that’s definitely not true.  My younger sister just graduated from MIT, and I’m so incredibly proud of her!

But in terms of financial things happening, I feel I’ve sort of just let things mellow.  Even though it’s important to get everything on autopilot (direct deposit, auto-transfers to savings, 401(k) and IRA auto-withdraw into funds, etc.), I feel like I’ve gotten TOO hands-off with my money.

I’m not aggressively paying off my debt.  I know I should be, but I’ve just been letting my student loan and car loan automatically withdraw the monthly payments.  What I should be doing is paying more than the monthly payment (i.e. more than the minimum).  I feel kind of ashamed that I haven’t been working harder at paying off my debt.  I think I felt more compelled to aggressively pay my student loans off back when my interest rates were hovering around 8.5%.  But now that they’re around 3.5%, I don’t feel that same urgency.

I think I need a plan.  A goal.  A due-by date.  If I’m following the general mantra of:  1) Start emergency fund, 2) pay off all debt, 3) finish emergency fund, then I have probably already taken care of 1 and 3.  My only other option besides (or in addition to) accelerating my debt payoff is further increasing my 401(k) contribution.  So that’s comparing a guaranteed return of 3-5% (if I pay off my debts) or a possible 8% return (the supposed return people quote on investments if I invest more).

And so I’m reaching out to you, my dear readers.  Help me!  How did you set your goals?  I was thinking if I figure out how much extra money I have each month, I could direct that at loan payoff, and keep going until the loans are gone.  Or I could set an end date (that is achievable) and make sure it’s all paid off by then.  Or I could split the “extra money” into half (or some other fraction) leaving my paycheck to go to my 401(k) and put the other amount against the loans.  I just don’t know!  Advice, please!  How did you pay off your debt loads?


5 Responses to “Personal Finance Stagnation”

  1. Revanche Says:

    Hm, I pretty much did the math first, and if all other things were equal (low interest, etc.) then I determined it by how much the debt irritated me and when I wanted that cash flow back in my own pocket.

    Then I’d balance that against the market (investing, savings rates) to see if I could do both in a reasonable amount of time. Usually my tolerance level + ambition usually level out to one to two year goal timelines.

    It was either 40/60 (savings/debt paydown) or 50/50 since the more you pay down, the more cash you have to put towards savings later down the road.


  2. admin Says:

    follow Dave Ramseys baby steps. pay off debt in order, smallest to largest, ignore interest.


  3. Kendall Says:

    Well … I realized that I don’t need a whole year of emergency fund all of the time, so I aimed for about 3 months and then started paying off my car loan as often and much as possible. When expenses popped up, I stopped paying off the loan and paid the expenses instead, and dipped into emergency fund if necessary. Then repaid emergency fund then went back to paying off loans. Once I pay off the loan (soon!), then I’ll continue building the emergency fund to 6-9 months and start saving for house down payment or something …


  4. […] I mentioned in my last post, I have been thinking of doing something else with money besides putting it into savings.  So, […]


  5. […] of the comments on some of my older blog posts (like on I’m okay with being wrong sometimes, Personal Finance Stagnation, and Fighting Lifestyle Inflation), I realized I should be more aggressive with my student loan […]


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