I recently graduated from college with $27,412.49 is student loan debt. While not as bad as other people's student loan debt or large credit card debt I would like to get rid of this debt as soon as possible. I also have some credit card debt from moving after college and not finding the job that I wanted as fast as I had thought I could. I will have this paid off by next month. I know that it is at 0% interest but I do no feel comfortable with this debt and want it gone as soon as possible. My debt breaks down to this:

Starting Debt:

Credit Card @ 0% for 15 months - $690.89

Student Loans
Starting Current
Private Loan #1 @ 8.25% $7,412.82 $7,412.82
Private Loan #2 @ 8.25% $7,420.67 $7,420.67
Federal Loan @ 5.25% $12,579.00 $12,579.00

I want to pay off the two private loans as fast as possible. I just finished my final 2 classes online that I required to complete my degree, which makes me eligible for in school deferment of my loans. I'm going to take advantage of this to help build my Emergency Fund quicker. My goal is to have an emergency fund of $2000 in 3-4 months. I am currently at $360.


In addition to paying off my student loans I also want to contribute the maximum to my Roth IRA every year. I have about $1200 left that I can contribute for this year. I can't decide whether to pay off my student loans or invest the money in the Roth IRA or HSA. I also don't have any health insurance through work so I would like to get a high deductible individual health insurance with an HSA. From what I've read HSA's seem like an excellent way to save for medical expenses. I hope to contribute the max to the HSA once I open it. I won't be able to contribute the max to both the HSA and Roth IRA while paying as much towards my student loans so I need to make some decisions. Any suggestions on where I should put my money?

I'm leaning towards maxing out both the IRA and HSA and then paying any extra towards the student loans. The minimum payments on my student loans don't create a hardship for me and I would like the safety net of enough money in the HSA to cover the deductible on my health insurance.

I'm looking for a part-time job that will help me pay for student loans/IRA/HSA. I haven't decided exactly how that will be spent yet.

I'm hoping that this will serve as a way for me to keep track of my progress and stay motivated.

Questions/Comments/Concerns are greatly appreciated.

**EDIT** 9/25

As of my next paycheck I will be down to $0 on my credit card debt! Also, at the end of the month when I get tipped out from work I should have $1000 in my emergency fund! I'm at $800 right now.

Next, I'm going to save up $1000 to put into an HSA account as I was just approved for health insurance. $70/month with a $5000 deductible and $1000 accident coverage. I have never had major medical problems but I do have minor accidents(stitches, broken bones) occasionally. Works for me until I can get a job that offers benefits.

I'm also in the process of changing careers. Hopefully to get something that pays better with better hours.

With loans at 8.25% I'd be marginally inclined to put more towards the loans than towards retirement. I'm vaguely aware that student loans might be deductible, but I'm not sure that this is a big enough issue to make it worthwhile.

Obviously if the credit card makes you feel bad then I can see why you want to pay it off, but it makes much more financial sense to put the money on one of your student loans, or even into your HSA or emergency savings.

Is the HSA a one year deal? I mean if you don't spend the money can you roll it over until next year? If not, then its probably better to fund emergency savings once you've estimated the amount of medical expenses you are likely to have this year.

Student loan interest is tax deductible but I don't know how much it reduces my taxes. Maybe at most 1%, but I'm not sure exactly. I'm not going to concern myself with it. Instead I use the tax return to pay down my student loans more. I'm definetly going to pay the credit card first it represesnts some poor decision making, unlike student loans which were for a(supposedly) good thing.

I'm really torn between paying off the student loans or simultaneously contributing to the IRA. On one hand I could take 2 years an put all my money towards the private student loan debt and pay it of as fast as I can. But on the other hand I could ma out the IRA and it will take me a few more years to pay the debt off but I will have $8-12,000+ more in my IRA.

I was in sort of a similar boat with similar student loan debt (but mostly federal loans), a HSA, no e-fund, no savings.

In case of a real medical emergency, is there anyone to bail you out (ie, parents?) If so, (assuming you are generally healthy), then I would just make regular monthly contributions to an HSA and grow it gradually. (HSAs carry from year to year)

If it were me, I would focus on the private loans before contributing the max to an IRA, but I'd try to save SOMETHING, even if it isn't the max. Once I was left with just federal loans (by the way, can you consolidate the gov't ones into a lower rate? You should look into that.), then I'd shift my priorities towards saving for retirement.

An e-fund probably comes first, though again, that depends on if you would have someone to bail you out in case of emergency.

I've decided today that I'm going to fund an emergency fund and a HSA first to prevent me from incurring more debt. Then pay the private student loans while contributing a small amount, maybe $50-75/month, to the IRA. My parents would give me some money if some sort of medical emergency occurred, but I would like to avoid that.

I did consolidate my federal loans, that is the rate they are at currently and it should drop to around 3% in the next few years when discounts are applied. I'm not too concerned with this debt and may drag it out as long as possible. The private loans are at prime+0%. I tried consolidating them but I was offered a rate of prime+1%. Companies that offer private student loan consolidation are few and far between compared to federal loan consolidation.

Yeah something about that federal guarantee drops interest rates and makes everybody and their brother want to consolidate those.

Let me know how the HSA goes. I've been thinking of starting one and going to private insurance because my work insurance is so insanely expensive for a reasonably healthy single 20-something. I think they're recouping losses on families with the single people.

Sounds like you got a solid plan!

I also only consolidated my federal loans (you are right, even if you can consolidate private loans, you don't get a good deal on them or anything), and since they were subsidized and I ended up taking 6 credits of coursework last spring I qualified as a half time student and they were zero percent interest for awhile. Unfortunately, 6 credits while working kept me insanely busy and i'm just doing three this semester.

I highly recommend The New Health Insurance Solution: How to Get Cheaper, Better Coverage Without a Traditional Employer Plan
by Paul Zane Pilzer if your interested in individual health insurance. HSA's seem like an amazingly great deal. I am going to schedule a meeting with a health insurance salesmen this week to discuss my options. Hopefully I can find someone very knowledgeable.

My only problem with HSA's is that I can't find a decent place to put it. From my research I've only found accounts with low interest and high fees. Have I been spoiled by HYS accounts? All I want is a guaranteed FDIC-insured savings account with a decent interest rate with no fees.

Also, ehealthinsurance.com is a great resource.

I've had an interesting last few weeks. I've been trying to get out of my low paying with long hours career(I may have recently graduated from college but I've been doing this since I was 15.) Anyway, long story short I was offered a job at an investment bank that fell through after I had already quit my previous job. I was unemployed for a few weeks with roughly $1,200 in my emergency fund. This is about a months worth of bills for me. Luckily I found a new job that pays about 30% more + bonuses and 30 hours less per week(i was working 70 hour weeks consistently) than I was working before. I plan to live off my previous budget of $500 per week which included various savings and debt repayment plans in addition to the extra income going solely to paying down my student loans.

Congrats on the new job. Sounds like things are working out well for you.