"I feel stuck in limbo, always having to have a roommate": I want to be independent but can't decide between paying off my student loans quickly or saving for my future. What should I do?

Hi Money Minder,

Hey there! I need your help with a few things.

So, I’ve got around $6100 in student loans with an interest of about $1.50 per day. I’m currently paying $500-$600 a month, but I want to get rid of it ASAP. The minimum payment is roughly $120, but I’m thinking of paying more to avoid that extra $45-$50 in interest every month. It means dipping into my savings, but it seems worth it. What do you think?
Living in this super expensive city is no joke! Rent here is crazy, averaging $1800+. I’m lucky to have a roommate, and my total expenses come to around $900 including all bills. I’ve been eyeing some cheaper places at $1400-$1600, but they’re not in the area I love. Would it be worth it to pay off my student loans and have that extra $500-$600 for rent when I live on my own next year?
I may not be raking in a ton, but I’m smart about saving and living within my means. My credit is solid, no debts in collections, and my car is paid off. Sounds good, right?

So, here’s the big question – Should I keep paying $500-$600 a month for the next 10 months, or should I dip into my savings and clear it in 4 months with $1550 monthly payments? Or perhaps just pay it all off right now? If I do, I’ll still have over 20k in savings. What would you do?

I’m in my early 30s, earning around $70 an hour, which is decent for this city. However, my job is tough on my body, and I feel like I’m reaching my limit after 10 years. Although I love what I do, I’m starting to think about the future. Any thoughts on this dilemma?

Your advice is highly appreciated! I feel a bit stuck and really want to have my own place to finally feel like a real grown-up.

Thanks a bunch for your time and help!
Retired and Happy

Response from THE MONEY MINDER:

Hello There,

Hello and thank you for reaching out! It sounds like you are facing some tough financial decisions, but you are doing a great job of being proactive and responsible with your money.

Given your situation, it seems like you have a few options regarding your student loans. While paying them off now would save you on interest in the long run, it’s important to ensure that it won’t leave you financially vulnerable. Considering you have a nice cushion in savings, you could potentially pay a larger sum each month towards your student loans, which could help you pay them off sooner without completely draining your savings.

Regarding your living situation, it’s commendable that you have been able to save money by having a roommate. If living alone is a goal you want to achieve, paying off your student loans faster could free up extra funds for a higher rent budget. However, it’s essential to weigh the benefits of having your own space against the cost and potential impact on your financial security.

Given the physically demanding nature of your job and the average career span in your profession, it might be worth considering how you can protect your long-term financial and physical well-being. It’s great that you enjoy what you do and have good financial habits, but it’s crucial to prioritize your health and financial stability for the future.

In summary, a balanced approach could be to continue paying a higher amount towards your student loans each month while also planning for your transition to living alone. This way, you can work towards your financial goals without compromising your savings or financial security.

I hope this advice is helpful to you as you navigate these decisions. If you ever need further assistance with managing your finances, feel free to reach out. Take care and best of luck with your future plans!

Farewell,
THE MONEY MINDER