Seeking advice from those wiser than I.

I recently graduated from San Diego State University with my MBA. Being born of the lower-middle class, I was left largely responsible for securing the money necessary to complete my education. Like millions others, I used student loans. Starting in September, I will start paying on these loans. I despise debt, and I would feel a lot more comfortable with it absolved.

I summon those wiser than myself to see about offering guidance, seeing as I am young and stupid as many of us sub-30'ers are.

I'm thinking of selling my collection. To meet the obligation, it would pretty much wipe me out of my collection. I do have a relatively small amount of liquid cash, but it would only make a dent in the figure. It's like trying to decide the best of two evils .

 

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The biggest problem with debt, is all the money paid into interest. Not sure how it is these days, but isn't the interest rate on student loans very low or 0%?
If they are that low, why put yourself into a bind to pay them off all at once, or a large chunk of it? Just make your payments, and pay any extra you are comfortable with.

It took me 15 years to pay mine off....

 

I hate being in debt myself too, but I use debt strategically and it has worked very well for me. I have two mortgages with very low interest rates. The interest on both loans is tax deductable, so that helps too. (One house is our primary residence, the other is a rental) The way I figure it, between the low interest rates and being tax deductable, the effective rate on the loans is less than inflation, so they're basically free loans. I could sacrifice investment money to pay them off, or I could pay them off quicker by paying more each month, but why?

In your case, I'm not sure which makes more sense. What's the interest rate on your loan? Will it go up in the future? Is the interest tax deductable? What do you think the value of your coins will be in 10-15 years?

There's a lot to be said for being debt free, but in the end, you should choose what makes the most economic sense. i.e. Try to look out fifteen years from now and analyze how much money will you have in your pocket with each possible route. If keeping your coins means a lot to you, try to put a dollar figure on that above and beyond what the total resale value of the coins is.

 

yeah...This is what I was trying to say. Albeit not so gracefully and well thought out.

 

I don't know what your student loans are in total, but if the cost of your schooling costs what I'm paying for my daughter, or about 35K per year, thats over 140K for four years. Paying that kind of debt off by making minimum payments, even at 0% interest, will take you into your retirement years. Do you really want to be paying off a loan for basically yhe rest of your working life? Thats money you could be spending on a mortgage and a family. Thats my take anyway.
Guy

 

Thank goodness I'm only going to owe roughly $25k when I graduate next summer.
I think what you do depends on how much you owe, why not just sell half of your collection or keep the stuff you like most.

 

Good point Cole. The balance plays a huge factor in this.

 

Contact the loan office(s) and see what your options are for consolidating all your student loan debt into one loan with the best terms and interest. Beyond that, examine your total finances in the manner that blaubart has suggested. This is easier said than done. You need to look at the big picture & when you have a tax deductable morgage you need to consider your long term options for consolidating & lowering your debt.

Unfortunately, debt & credit is part of our economic existence. :welcome:

 

First, I applaud your concern about your financial position at a young age. Just having the awareness that you do points to you making a good decision regardless of what you do. I feel the single biggest factor in building wealth is being thoughtful about your financies.

To your actual situation I think it largely depends on the total amount of debt, your current job situation, and largely your interest rate. Keep in mind that if your interest rate is below the level of inflation, and the loan is on a non-depriciating asset, then your balance goes down as time passes due to inflation errosion. My wife has about $25,000 in student loan debt on a ten year note at 1.9 percent. We could pay it off but I feel it's better to invest our excess money and pay the loan on time.

 

The total loan amount is slightly under $30K. I supplemented with cash to minimize my need for loans.

Having spoke with the lender, monthly payments are less than $200 a month. This is easily manageable, but somewhat of a nuisance.

I think I will follow your advice and pay more than the regular monthly payment, but keep my collection. I was looking at some choice pieces and I don't think I could easily part.

 

You sound very much like me Provotdo. I had to pull myself up by my bootstraps also, and was the first grandchild on my parents side to ever attend college.

I would say to prioritize. You need to first balance out your budget making bare minimum student loan payments. The key is to not go into credit card debt. Then start building savings. You are a young guy, will get married, want a house, etc. After a few years and you have some savings and life is not such a struggle, if you wish to pay extra on student loans feel free.

I am not advocating selling your collection since its a cheap form of pleasure. The interest you will save on yoru student loan is not much, and I am guessing the pleasure you would get owning your collection would be more valuable than that. This is just an assumption. If you are bored with it and want to do something else anyway, then feel free to sell it, but I would put that money in savings before I paid off low interest student loans, at least for a bit.

Chris

 

Dont sell your collection, you got a mba...go get a good job and make bank lol

 

You are a lucky puppy

30k in low intrest loan(s) and an MBA?! :hail:

Pay the $200 a month or double up on the payments if you don't have a low interest tax deductable loan to which you could transfer the balance.

Now back to coins.....

 

I wouldn't say lucky, he probably paid most of it as he went. I graduated with my MBA with zero in student loans, I paid for it as I went.

 

Whatever you decide, be sure to pay off the loan before you get married and have kids.

 

This is why you drive an Escalade...awwww yeahhhh!

 

Lol, I kind of wish I did still drive it. Wife took it, so I had to go out and buy myself a new car. I got an Acura MDX.

 

Oh yeah, I think I saw you in it.

 

I would sell your collection and use it for a down payment on a house (or condo). The So Cal RE market is starting to go back up. San Diego is an area that will escalate very quickly when things get back to normal. You will be priced out of it. You won't be priced out of the coins that you sell now. You will easily be able to replace your present coins on a MBA salary. Can't say the same thing for buying San Diego real estate, in a few years. I've lived through 4 of these So Cal RE cycles. You don't want to be a RE buyer when the prices head skyward.