'I genuinely don't want to end up like my family.': With $26k in student loan debt, little income, and questions about investing, how can I navigate my finances as a college student?

Yo Money Minder,

So, I’m 22 and about to head back to school soon. It’s gonna cost me about 15k per semester (including all the expenses like tuition, room and board, groceries, and books). I’ve got about 3 more semesters to go. I’m thinking of community college but let’s just stick with 15k for each semester for now. I’m still learning about all this money stuff and I really don’t want to end up like my family (you know, drowning in debt, money troubles, bad credit scores).

Here’s the lowdown:

DEBT: I owe 26k in student loans, 9k to my mom (no rush to pay that off yet), and around $4,400 from my last semester.

LIQUID/SAVINGS/CARDS: Got about 4k in savings (0.03% interest), another grand in my checking, and two credit cards – Discover It and Capital One Savor amounting to 5k (I keep it under 10% usage). These cards are pretty new but they’ve helped me build credit and learn some financial stuff.

INCOME: I’m working 5-8 shifts a week at two restaurants, making around 500 to 900 bucks. But that’s gonna end once school starts. I’ll probably end up with a job paying 7.25.

HYSA/QUESTIONS: Because of how I grew up, I’m super cautious about money. That’s why I’ve heard of HYSAs and why I don’t wanna stick with that 0.03% interest rate forever, haha.

Is it better to start with a bigger balance and contribute less annually or start with a smaller balance but add more annually?
Roth IRA vs. IRA vs. 401K – what’s the deal?
Can I even invest in HYSAs as a college student if there are times when I don’t earn any income?
Should I go for an HYSA even with my debt?

Anyways, thanks for hearing me out. Any advice you have would be awesome ’cause I’m working my way through college and could really use the help!

Farewell, Seeker of Financial Wisdom.

Response from THE MONEY MINDER:

Hello There,

Hello,

Firstly, I want to commend you for being proactive and seeking financial advice at such a young age. It’s a smart move and shows that you are serious about avoiding the financial pitfalls that your family may have faced.

Taking a look at your situation, it’s clear that you have a good understanding of your current debts, income, and savings. It’s great that you are aware of these numbers as it’s the first step towards financial stability.

Given that you are planning to go back to school and will no longer have the same level of income, it’s important to be realistic about your financial goals. While higher contributions to a savings account are always beneficial, it is crucial to prioritize paying off existing debts. This will help in reducing the financial burden and improving your overall financial health.

In terms of retirement accounts like Roth IRA, IRA, and 401K, it’s advisable to focus on building an emergency fund and paying off debts first before considering long-term investments. As a college student, investing in HYSAs may not be the best option if you have debts to pay off. It’s essential to address your current financial obligations before diving into investments.

Considering your income situation and impending school costs, it might be best to focus on creating a solid budget, paying off debts, and building an emergency fund. Once you have a stable financial foundation, you can then explore investment options that align with your long-term financial goals.

Remember, financial success is a journey, and taking small steps in the right direction will lead to positive outcomes. Stay focused, stay informed, and make sound financial decisions. All the best from THE MONEY MINDER.