This upcoming week I have to make a tough decision, do I pay one of my college loans and not have any money for the next few months or do I make the monthly payments that will incur interest over time?
One of my school loans, gave me 9 months after graduation to pay back the full amount without incurring any interest. If I couldn't pay all of it within the 9 month window then I would have to make monthly payments.
The loan is ten thousand dollars, which I have, but if I were to pay it all together, then I won't have much money left in my bank account.
So I've been going back and forth about it.
There is a plus side to paying it off right now, I wouldn't have to pay interest, which would end up being more than four thousand dollars.
In order for me to do this, I would have to drastically cut back on spending for a few months.
What would you do, pay it off all together and try to get by for a few months or just make the monthly payments and have money in your bank account?
dollarish.com
Mr. Savings
Comments (59)
I would pay it all off at once and then live with the budget for a few months. I would rather be broke for a short amount of time than pay all that interest!
pay it off and be done with it!
Pay it all off now.
SO worth it in the long run.
i would pay it all off, go for extreme coupon usage, bumming off friends/parents, etc. just know that you won't be buying clothes, extra food, or nice toothpaste for a while (;
Pay it all now. Rather live a few months frugal than basically lose $4000.
I would just pay it off all at once. If you have the money right now, why not?
Do it.
Pay it all off!!!
Can you pay off 9,500 and then do your best to pay off the last $500 before too much interest accrues?
You left out some key information- what will be the interest rate on the loan, and do you have credit card debt?
If the rate will be low, like around 5% or lower, then it's a matter of paying off the highest rates first, such as credit card debt. If the loan is you only outstanding bill that you would pay interest on, then you can consider paying it off ASAP.
If paying it all would leave you too strapped for cash, then consider paying enough to knock it out in 18 months instead of 9. You are still paying extra and will only pay about 9 months if interest.
What exactly is living frugally? Are you just giving up discretionary spending or are you forfeiting a constant roof over your head? Other than living frugally, are there any major plans which you need the money for? (Credit Card debt, last trip before work, etc...) If not, then a few months of living frugally is definitely worth 4,000 dollars. Think about it as if someone were to give you 4,000 dollars if you lived frugally. It is also a good way to learn how to budget.
Based on what I can gather, if you pay it off, you dont pay any of the interest at all (same as cash kind of thing). If you dont pay it off, it sounds like you will have to pay the interest you accumulated over the last X number of years. Did I catch that right? Or is the interest accumulating over the next months/years while you are making payments?
If you know a way to make more than $4000 with this money before having the loan all paid off - than keep the money and make more than the interest you would be paying!
You have to make your money work for you. I suggest living frugally always - regardless of how much money you have in the bank. The rich arent rich because of how much they make. It is because of how much of what they make they keep!
From the information you gave, it sounds like you would have more money in the end if you just paid it off now than if you made monthly payments. If that is true, I say pay it off.
I'd definitely pay it all off.
But I'm the kind of girl that can't stand to be in debt.
I think it really depends on your situation. First off like someone else said would the interest be for the years already gone by or just future interest. If its just future interest then I would consider paying half to 3/4 of the loan off and making payments on the part thats left over. That way you still have a couple grand in the bank, just in case. If the interest would have already accrued then i think you need to look at your living situation, can you actually live without money, how safe is your job. We are entering a recession so depending on your situation it might be better for you to make small monthly payments but have a good amount of emergency money. Also even if you do have payments, as far as student loans go there is no pre-payment penalty. So you could make large monthly payments to pay it off fast.
pay it off now. sure you'll be broke for a few months, but better then having to py 4000 interest
i say pay it all at once, so less interest ^__^ and if you honestly have no money, stay home and eat, download movies instead, its not that hard to bare, just wait until next paycheck :) at least you know you have one less thing to deal with ? just a little pain, no pain no gain ?
I would pay it all off now - GET IT OVER AND DONE WITH
pay it all off ... now.
not only you'll be debt free and feel at ease, you'll save a lot of money overtime due to additional interest to loans. all that money could had been spent better.
grown ups had always advised me not to hold onto any loan or bills.
& money will always come to you ...
but the money you give for interest wont come to you.
Whoa!!! What kind of interest rate do you have?
As for me, I'm doing a combination of both - paying it off early in monthly payments. I know I won't pay it all off in the 9 months, but I'll at least cut a big chunk out of it.
pay it off =) why live in debt if you dont have to???
Um pay it off at once and save yourself the $4000.
Pay it all off and spend frugally. That way you'll be saving money. As long as you don't experience some sort of out-of-this-world disaster afterwards, you should be just fine.
if u have the money, go ahead and pay it off.
however, i also heard that if you're gonna have debt, student debt is the best kind to have.. so if after graduation, ur thinking of homes, cars, etc.. then i'd just pay for that car and leave the student debt.
Pay it all together, since you have the money anyway. You can divide the money in the 9 month period you said and in case any emergency pop up, just take the interest method.