‘Looking for a way to save more besides rice and beans’: I have over $100k in student loan debt and a tight budget. How can I accelerate paying off my loans and start saving?

Hi Money Minder,

Hey there, I’m in a bit of a pickle. I’m a 24-year-old dude living solo, trying to juggle a full-time job and grad school at night. I’m looking to move somewhere cheaper because I didn’t really get the best deal when I relocated for work. Right now, I’ve got about $15,000 in savings (not stashed in a fancy high-yield savings account yet) and some bonds. Fingers crossed, I might be getting a raise and a bonus this month thanks to the company’s annual performance reviews, with a potential promotion on the horizon.

I’m trying to be smart about my food spending, but it’s a struggle because I’m hardly ever home. Meal prepping stuff that stays good for 14 hours is like playing food Tetris for me. When I do have to eat out, I try to snag deals on healthier options to keep it under 5 bucks a meal.

My car insurance is killing me – it used to be a steal up in the Northeast, but ever since I moved to this accident-prone state, the rates have shot up. My car is a trusty 10-year-old sedan that’s still holding its value and giving me decent mileage. Unfortunately, I’m stuck in a public transit dead zone, so carpooling isn’t really an option since no one else has the same hectic schedule I do with grad school.

I’ve tried to refinance my loans, but even with my stellar credit score, I can’t seem to get any quotes below 5.85%. Most of my loans are at or below this rate, with the majority being “private” loans that don’t offer any forgiveness or covid-related payment perks. My main gripe is the loan principals – I owe over 100k and at this rate, it’s going to take me another 12 years to pay it all off. I’ve got a few federal loans that are now deferred since I’m back in school, so I’m thinking of refinancing the private ones at a higher rate, where they’ll be in deferment. Hopefully, the rates go down over the next few years while I chip away at the interest and principal.

Oh, almost forgot – my employer matches my 401k contributions based on my student loan payments. I’m maxing out that match every month by putting in 10% of my salary towards my loans.

Take care,
Struggling Student

Response from THE MONEY MINDER:

Hello There,

Congratulations on juggling a full-time job, grad school, and managing your finances effectively. It sounds like you have a well-thought-out plan in place, but there are always areas to tweak and optimize for greater financial stability.

Regarding your food budget, it’s understandable that meal prepping can be challenging with your schedule. One practical approach could be to batch cook on weekends and freeze individual portions. This way, you can grab ready-to-eat meals in the morning that will stay good until you eat them. Additionally, consider incorporating more budget-friendly staples like beans, rice, and seasonal produce to keep costs low.

For your car insurance, it seems like you’re already aware of the reasons behind the higher rates in your current location. Since public transportation isn’t a viable option for you, continue to look for discounts or bundling options that insurance companies may offer. It might also be worth reevaluating your coverage to see if there are any areas where you can adjust without compromising your protection.

When it comes to refinancing your loans, the interest rates you mentioned are quite competitive, especially for private loans. Given the substantial principal amount, focusing on reducing the principal whenever possible can save you a significant amount in the long run. Since you are already taking advantage of your employer’s 401k matching program, continue to maximize this benefit while prioritizing loan repayment.

In conclusion, it seems like you are on the right track with your financial strategy. Keep exploring opportunities to optimize your expenses, stay proactive in managing your debt, and remain focused on your long-term goals. Your dedication to financial responsibility will pay off in the future. Best of luck with your upcoming promotion and thank you for sharing your financial insights with us.

Farewell from THE MONEY MINDER.