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It looks like I'll be leaving school with $5,500 in debt. I actually have money on hand to pay this off, but with 6% interest I'm not sure if it'd be better to pay it off over the course of a year, eat a few hundred dollars, and build credit.

Unlike a car loan or credit card debt, interest on most student loans is tax deductible.

i want to be debt free :( i listened to dave ramsey for the first time today while driving from san antonio to dallas. i never really considered how great life would be without debt. after listening i turned to my fiance and told her the first thing on our agenda after marriage is to get debt free. she and i both have alot of debt from student loans.

The first step should be to establish an emergency fund. That way you have a mechanism for dealing with the things that will come up. After you have that in place, then aggressively attack your debts.

To stay on topic: When you start building your monthly budget, be sure to allow for the purchase of firearms and ammunition.

Since I spent 5 hours with Dave on Saturday, I have to point out that the first Baby Step is to establish a $1000 starter emergency fund. (A fully-funded emergency fund is step 3.)

So stick $1000 where you won't use it except for a true emergency ("I want it" is not an emergency; "The car I drive to work in is broken" usually is.), and throw money at that debt! (That's Baby Step 2, and it's where I currently live.)

Will938 wrote:It looks like I'll be leaving school with $5,500 in debt. I actually have money on hand to pay this off, but with 6% interest I'm not sure if it'd be better to pay it off over the course of a year, eat a few hundred dollars, and build credit.

"Pay it off", Having no debt is one of the greatest feeling in the world. There is no reason to to keep debt if you have money to pay it off. If you listent o Dave you will quickly learn that there is no reason to build credit. IF you pay for everything with cash.

Retired at 55 .....it not your cash flow but what you owe....

ProudNativeTexican wrote:

Will938 wrote:It looks like I'll be leaving school with $5,500 in debt. I actually have money on hand to pay this off, but with 6% interest I'm not sure if it'd be better to pay it off over the course of a year, eat a few hundred dollars, and build credit.

"Pay it off", Having no debt is one of the greatest feeling in the world. There is no reason to to keep debt if you have money to pay it off. If you listent o Dave you will quickly learn that there is no reason to build credit. IF you pay for everything with cash.

question....i have debt from both my vehicle and student loans. i have enough to pay both off but will have no emergency funds and no savings if i do so. help me to justify doing this. it's really hard to see all your savings disappear especially when it's going to debt. i know i shoudl pay it all off, i just have a hard time clicking the buttons. everytime i start to i get scared and thnk to myself...."what if i lose my job" "what if this, what if that".

Go to the library and check out (or buy if you must) "Financial Peace Revisited" and/or "The Total Money Makeover" by Dave Ramsey. Both cover the Baby Steps.

Dave would tell you to take all your savings (except $1,000 for an emergency fund) and pay down the debt. Then do everything you can, with gazelle intensity, to pay the debt off completely. THEN take what you were making in payments and fully fund your emergency fund to the level of 3-6 months of expenses.

And make sure you and your fiancee are on the same page.
And between steps 2 and 3, feel free to call Dave so you can scream "I'm debt free!"