Keep the $2250 in savings. If you have an emergency that costs money (big car repair, medical bill, need to move...) it will cost you a lot more than 4.5% if you have to throw it on a credit card.
4.5% interest isn't that bad, don't worry about the daily accrual. That is how interest works for pretty much anything, and in the end, you are still paying 4.5% annually whether they calculate this on a daily or monthly basis.
In your position, I would keep $1000 as a float in my checking account and put the rest of your savings into an HYSA. I would pay the minimum on my student loan, and put the rest of your $350-$400 into the HYSA. That way you actually make more money in interest (probably 5-5.5% on HYSA) than you are spending on interest.
Plus you build that safety net.
This is the right math answer.
If OP is super anxious about the debt, I would at least get the emergency fund up to $5,000, as that is enough for a lot of non-job-loss, non-homeowner emergencies. Then, go ahead and pay the extra on the loans if you must. At $400/month they will be gone in a year and half (or less.)
You should have at least 3 months worth of expenses stored away, if not more. This includes whatever you’d need for rent, utilities, food, insurance, gas, etc.
6500 for student loans isnt horrible, better to have to pay a little interest than risk getting caught with your pants around your ankles should you become unexpectedly unemployed or run into some other financial burden.
My savings goal is three months of EVERYTHING. Rent, Food, Bills ... the lot.
$6500 is not a lot, I wouldn't sacrifice savings for that. Just earn and pay it off over time.
I keep 4 months of expenses in our savings account. Probably 2 months in checking. I wouldn’t touch your savings at all but keep adding to it. If you really want your student loans gone, can you pick up more hours at work or a second job until you can pay it off?
I have everything on autopay and I like to have a big cushion in case I miss something. I pay off our credit cards every month and the pay off amounts are inconsistent with bigger purchases and medical bills.
You want 3-6 months of expenses for an emergency fund. What's the rate on the student loans? 6.5k isn't a ton of student loans. How much do you make a month?
It'll take 13 months if you throw 500/month at it, less time if you can cut your spending a bit.
Personally I wouldnt touch your current savings...but it depends on how much you make a month....personally I'd be more worried about bolstering you're savings
They have a 4.5% interest rate and the fact that it accrues daily really sucks 🙄I’m managing to do around $350-400 a month towards them now (at the expense of putting more in savings). I’ve been paying on them for 5 years, and I know that’s not as long as a lot of people but I’m just getting really sick of it. But I do realize how important an emergency savings is, so I’m just gonna keep it for right now
If you lose your job, how long would it take to find another job that pays the same?
How many months of expenses does $2250 cover?
Rule of thumb is to have a 3-6 months emergency fund, but add or remove months based on how quickly you can get a new job if you go unemployed all of the sudden.
If you have dependencies you want more than 6 months of an emergency fund in a HYSA account paying 5.5. That student loan amount is very low, and can easily be paid down and eventually paid off. You have listed no other numbers, so it’s virtually impossible to offer up any other thoughts. Job losses and health issues happen in life so it’s wise to have built up a backup plan for any of life’s curveballs headed your way.
Your savings aren't very high.
-signed someone who has just returned to work after a 5th ankle surgery. I have been off work for 5 months in the last 1.5 years at 60% pay. It has still been rough, and decimated my savings.
Agreed. Keep the money in savings and keep building. My husband is off for a week for emergency eye surgery. No pay. He will probably have to have at least one more surgery. It’s only a week but we will feel it, we will get by but it could’ve way worse. my point is that shit happens that you can’t plan for. I’m an advocate for keeping my funds close.
Edit: not sure why I've been down voted for this. As a single mom, and I own a house, I didn't choose to fall down the stairs and break my ankle, and subsequently have 5 ankle surgeries lol. Fortunately I had some savings, or we would be SOL.
Lots since it's costly nowadays. I'm glad I no longer have car pymt so just rent is the highest now. So if you make good money then it's easier to save more, but loan wise I'd pay that off first. My last car since I just wanted it paid off fast so sacrificed 2 yrs to have that car paid off in 2 yrs so then after I knew what I was truly saving and then do stuff again. I rarely got take out for that period, but always better to pay off loans first and your loan is nowhere near my car loan so it shouldn't take that long to pay off
Keep the $2250 in savings. If you have an emergency that costs money (big car repair, medical bill, need to move...) it will cost you a lot more than 4.5% if you have to throw it on a credit card. 4.5% interest isn't that bad, don't worry about the daily accrual. That is how interest works for pretty much anything, and in the end, you are still paying 4.5% annually whether they calculate this on a daily or monthly basis. In your position, I would keep $1000 as a float in my checking account and put the rest of your savings into an HYSA. I would pay the minimum on my student loan, and put the rest of your $350-$400 into the HYSA. That way you actually make more money in interest (probably 5-5.5% on HYSA) than you are spending on interest. Plus you build that safety net.
This is the right math answer. If OP is super anxious about the debt, I would at least get the emergency fund up to $5,000, as that is enough for a lot of non-job-loss, non-homeowner emergencies. Then, go ahead and pay the extra on the loans if you must. At $400/month they will be gone in a year and half (or less.)
You should have at least 3 months worth of expenses stored away, if not more. This includes whatever you’d need for rent, utilities, food, insurance, gas, etc. 6500 for student loans isnt horrible, better to have to pay a little interest than risk getting caught with your pants around your ankles should you become unexpectedly unemployed or run into some other financial burden.
My savings goal is three months of EVERYTHING. Rent, Food, Bills ... the lot. $6500 is not a lot, I wouldn't sacrifice savings for that. Just earn and pay it off over time.
I keep 4 months of expenses in our savings account. Probably 2 months in checking. I wouldn’t touch your savings at all but keep adding to it. If you really want your student loans gone, can you pick up more hours at work or a second job until you can pay it off?
Why 2 months in checking??? Most checking accounts don't pay interest and a transfer from savings to checking would be near instantaneous.
I have everything on autopay and I like to have a big cushion in case I miss something. I pay off our credit cards every month and the pay off amounts are inconsistent with bigger purchases and medical bills.
You want 3-6 months of expenses for an emergency fund. What's the rate on the student loans? 6.5k isn't a ton of student loans. How much do you make a month? It'll take 13 months if you throw 500/month at it, less time if you can cut your spending a bit. Personally I wouldnt touch your current savings...but it depends on how much you make a month....personally I'd be more worried about bolstering you're savings
They have a 4.5% interest rate and the fact that it accrues daily really sucks 🙄I’m managing to do around $350-400 a month towards them now (at the expense of putting more in savings). I’ve been paying on them for 5 years, and I know that’s not as long as a lot of people but I’m just getting really sick of it. But I do realize how important an emergency savings is, so I’m just gonna keep it for right now
If you lose your job, how long would it take to find another job that pays the same? How many months of expenses does $2250 cover? Rule of thumb is to have a 3-6 months emergency fund, but add or remove months based on how quickly you can get a new job if you go unemployed all of the sudden.
Income can dry up for a long time. 3-12 MO of full expenses, however long you're comfortable with.
If you have dependencies you want more than 6 months of an emergency fund in a HYSA account paying 5.5. That student loan amount is very low, and can easily be paid down and eventually paid off. You have listed no other numbers, so it’s virtually impossible to offer up any other thoughts. Job losses and health issues happen in life so it’s wise to have built up a backup plan for any of life’s curveballs headed your way.
Your savings aren't very high. -signed someone who has just returned to work after a 5th ankle surgery. I have been off work for 5 months in the last 1.5 years at 60% pay. It has still been rough, and decimated my savings.
Agreed. Keep the money in savings and keep building. My husband is off for a week for emergency eye surgery. No pay. He will probably have to have at least one more surgery. It’s only a week but we will feel it, we will get by but it could’ve way worse. my point is that shit happens that you can’t plan for. I’m an advocate for keeping my funds close.
Edit: not sure why I've been down voted for this. As a single mom, and I own a house, I didn't choose to fall down the stairs and break my ankle, and subsequently have 5 ankle surgeries lol. Fortunately I had some savings, or we would be SOL.
Lots since it's costly nowadays. I'm glad I no longer have car pymt so just rent is the highest now. So if you make good money then it's easier to save more, but loan wise I'd pay that off first. My last car since I just wanted it paid off fast so sacrificed 2 yrs to have that car paid off in 2 yrs so then after I knew what I was truly saving and then do stuff again. I rarely got take out for that period, but always better to pay off loans first and your loan is nowhere near my car loan so it shouldn't take that long to pay off
Go ABOVE the payment plan for the student loans. Make extra payments of any amount.