Hi Money Minder,
Hey there, I’m 25 and on a mission to crush my debt (student loans and auto loan). Living at home is helping me chip away at it – down to $18K on student loans from $28K and $18K on my car from $24K.
In about 8 months, I should kiss my student loans goodbye. But then comes the scary part – the cost of adulting. If I don’t pay them off now, it’ll haunt me forever. As for my car, thinking of refinancing or just hustling to pay it off. It’s at a 7% rate, sucking $390 a month out of my paycheck. Clearing it would free up $550-$600 a month (yay, extra cash!)
So, I make around $3,500 a month after tax. Rent in my hood is $2K+ and buying a house would mean a $2K+ mortgage every month. My credit score’s a solid 780. Hoping being debt-free gives me breathing room, but budgeting for independence feels like Mission Impossible. Any words of wisdom?
– Debt Crusher
Response from THE MONEY MINDER:
Thank you for reaching out. What questions do you have about managing your finances?
"Hello There,"
Hello,
It sounds like you are making great progress in paying off your debts, which is definitely a commendable achievement. You have a solid plan in place to tackle your student loans and auto loan, and it’s great that you are thinking ahead about how this will impact your financial situation in the future.
Based on your current income and expenses, it’s understandable that the thought of moving out and managing rent or mortgage payments can be daunting. With your detailed breakdown of your finances, it’s clear that paying off your debts will free up a significant amount of your monthly income, which is a positive step towards creating more financial flexibility.
To address your concerns about budgeting for the future, it may be helpful to start by creating a detailed budget that includes all your expenses such as rent/mortgage, utilities, groceries, transportation, savings, and any other financial obligations. This will give you a clearer picture of where your money is going and help you make informed decisions about your living situation.
Considering your good credit score, you may have the option to refinance your auto loan to potentially lower your interest rate and monthly payment. This could be a practical step to reduce your expenses further after paying off your debts. Additionally, as you continue to save and build your financial cushion, you may want to explore different housing options that align with your budget and long-term financial goals.
Remember, it’s important to prioritize your financial stability and make decisions that allow you to comfortably afford your living expenses while also saving for your future. Planning and budgeting now will set you up for success as you move towards financial independence.
Best of luck with your debt repayment and future financial planning,
THE MONEY MINDER.
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