Rainwater: First off, I recommend you immediately implement a savings program targeted at 15% of your gross income - you can maximize your employer sponsored plans to do this. Next, I recommend you set up a savings process to create an emergency fund equal to 6 mos expenses. Do not run up credit card debt. How much can you pay on the student loans under these circumstances? Pay as much as you can. When you get to the point where you have the emergency fund, start saving for the down payment on a home. As your income goes up, DO NOT increase your standard of living with all the raise. Split the raise between your loans and savings programs. YES you want to retire the debt, but you also want to be improving your financial circumstances, and building your savings and investing muscles as you go.
LadeyDi, have you pulled a copy of your credit report? You need to know what is on it so you don't get blindsided. You might be making all of your payments on time but your score has declined because you are using most of your available credit. Then, if the employer does a credit check (you will have to sign something to allow this) be up front about it. Tell them your issues before they see for themselves. I think they will appreciate your honesty and understand that many people who would make terrific employees have similar circumstance because of recent, universal financial problems. You are not the only one. You might add that you need the job because it is important for you to pay your obligations.
It is always a good idea to add to principle periodically. It is best to make regular principle payments when you have the extra money. If you would prefer to build up money in a savings account, that is fine also.
Really great advice, Bill, thank you. We have another question from a young person for you -- here's Eliza.
Bobbie, I have a question for you from Bob B. And Debbie, here's one from DeboraDee. (Very popular name in today's chat!)
Gee: David is right on. Also, depending on where you live another reason for a trust is to avoid probate costs. Here in California they can be quite high. So depending on where you live this could be another aspect of the analysis.
Rainwater: First off, I recommend you immediately implement a savings program targeted at 15% of your gross income - you can maximize your employer sponsored plans to do this. Next, I recommend you set up a savings process to create an emergency fund equal to 6 mos expenses. Do not run up credit card debt. How much can you pay on the student loans under these circumstances? Pay as much as you can. When you get to the point where you have the emergency fund, start saving for the down payment on a home. As your income goes up, DO NOT increase your standard of living with all the raise. Split the raise between your loans and savings programs. YES you want to retire the debt, but you also want to be improving your financial circumstances, and building your savings and investing muscles as you go.
LadeyDi, have you pulled a copy of your credit report? You need to know what is on it so you don't get blindsided. You might be making all of your payments on time but your score has declined because you are using most of your available credit. Then, if the employer does a credit check (you will have to sign something to allow this) be up front about it. Tell them your issues before they see for themselves. I think they will appreciate your honesty and understand that many people who would make terrific employees have similar circumstance because of recent, universal financial problems. You are not the only one. You might add that you need the job because it is important for you to pay your obligations.
I started to work with a full service broker in Mid Aug '08 at a huge firm with a Roth IRA, investing with relatively aggressive risk tolerance. Since then the account is essentially flat (and considering the 1.35% fee I am paying, I am well down).
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Nate: Vanguard is a great place to start. They have very low cost mutual funds, most of which you can get into via monthly dollar-cost-averaging purchases. Alternately, you can use an online broker and purchase low cost ETFs (Vanguard's and others). We recommend five online brokers in our getting started with investing article: www.marottaonmoney.com
