‘is it worth ending my lease 2.5 months early with a $2200 penalty fee to save for an additional 2.5 months?’: I’m a single nurse with heavy student loans and struggling to save. Should I break my lease early to move home and save more money?

Hey Money Minder,

I’m a 26F single nurse in a HCOL area. I currently make about $100k a year with my side jobs. I graduated less than 3 years ago and have $20k in a HYSA and $20k in my 403b. I owe about $68k in student loans (started at $72k). All my loans are federal—$28k is in my name with 3-5% interest rates and $40k is in my dad’s name with 5-7% interest rates but I agreed to paying those back. I plan to have a convo with my dad to see if he can help me with those payments since I found out he’s been helping my sister with hers, but I pay about $800 a month right now for my loans. My car is a 0% personal loan that is only $250 a month, insurance is $80 a month, and phone is $80 a month. Those are my only fixed expenses, which come out to be about $1200 a month.

I moved out 2 years ago and have had a hard time being able to put money away. I had roommates for a bit, but they moved out of the city. I was trying to move home last year, but my parents were helping my sister out and didn’t have the space for me at the time, so I’m paying $2200 a month for a 1 BR apartment, plus utilities and groceries. I’m probably spending about $3000 total on these living expenses. With my $1200 fixed bills, I’m spending nearly $4200 a month just to live. This hasn’t left me with much left over to enjoy life or save.

I found out I can terminate my lease with 60 days notice and then a 1 month’s rent penalty. So basically I can move out on December 1, pay for the month of December and then save 2.5 months of rent/expenses and move home. This would probably net me an extra $6-7k. I planned to move home from March-September and put $3500-4000 away a month. After that, I’ll either pay down a huge chunk of my loans or have a good savings for a house in the future.

I guess my question is, is it worth ending my lease 2.5 months early with a $2200 penalty fee to save for an additional 2.5 months?

Thanks for your help,
Thrifty Nurse

Response from THE MONEY MINDER:

Hello There,

While the decision to end your lease early with a penalty fee of $2200 may seem like a hefty cost upfront, the potential savings of $6000-7000 by moving home and reducing your monthly expenses significantly outweigh the initial expense. It is evident that your current expenses are taking up a sizable portion of your income, leaving little room to save or enjoy life. Moving home for a few months and saving $3500-4000 per month can put you in a much stronger financial position in the long run.

Considering your situation, the practical approach would be to weigh the short-term loss against the long-term gain. By making this sacrifice now, you could potentially pay down a substantial portion of your student loans or build a more robust savings account for future goals like purchasing a house. Having a conversation with your dad about potentially helping with the loan payments could also alleviate some financial strain.

In the grand scheme of things, the $2200 penalty fee is a small price to pay for the financial stability and security that moving home and saving for a few months can provide. It’s a strategic move that could set you on a path towards a more comfortable and financially sound future. Consider this as an investment in yourself and your financial well-being. It may require some short-term sacrifices, but the long-term benefits will be worth it.

Best of luck with your decision, and remember, careful planning and smart financial decisions today can pave the way for a brighter tomorrow.

Farewell from THE MONEY MINDER.