I've got some extra cash that I can throw down on student loans, and I'm wondering which one(s) I should try to pay off first. I've got enough to pay off almost everything, but I've got a big purchase in the near future (6-9 months from now) and am hoping to probably spend about $10,000 total right now.

$7374.57 @ 4.5 fixed federal
$6040.13 @ 6.0 var private
$5725.97 @ 5.75 var private
$5181.21 @ 6.55 fixed federal
$2679.04 @ 5.75 var private
$1739.52 @ 4.5 fixed private

Thanks for the advice!

As you have $10000, clear last 3 in one payment, then the number of loans will be less.

I would knock out the two variable private loans. It's madness to pay off a fixed interest rate with that ticking variable timebomb out there.

Basically there are only two different ways you can tackle these loans, and both have been mentioned. There are pros and cons of each choice.

Choice A: Pay off the smallest loan Amounts first. (suggested by Newbie08)
This choice is popular with the Dave Ramsey crowd.
Pro: Makes you feel great that you have less loans to worry about. (motivation at the start)
Pro: Lets you "snowball" your payments for a quick and easy timetable payoff.
Con: Not necessarily the most cost-effective way to pay them off, as you will be paying more money in interest in the long run.

Choice B: Pay off the Loans in order of Largest interest rate. (suggested by TazDollars)
This choice is popular among rational mathematicians with no emotions wrapped into the debt.
Pro: You will be paying less money total by paying down the high/variable interest rates first.
Con: You may not get a feeling of accomplishment and may feel discouraged quickly.

The choice is yours. It would be "smarter" to pay off the large loan with the 6% variable. But it would feel really good to immediately knock out the three smaller loans today. Its up to you!

Good luck!

I would add that it matters how long you plan to take in paying off the remaining loans after you knock a few off now. If you plan on keeping them around for 10 years, then Choice B may be your option due to the interest rates. If you are serious about getting out of debt and don't want any of these loans around 3 years from now, then you'll probably want Choice A in order to give you a jumpstart on the beginning a very focused debt elimination mission!!

I'm also curious, what is your big purchase (hopefully not financing) it?

Thanks for the tips everyone. I knew the 2 options (pay lowest amount first, or pay highest interest first), but didn't know if there would be a difference for student loans (federal vs. private). I guess there technically is, since the federal loans have the fixed interest rate.

I'm going to pay off the highest interest rate variable loans first, and once those are paid off I'll try to finish up the federal loans. I'm making great money right now, and have been working across the country (ie my company is paying my rent, car, gas, insurance, plus a nice per-diem) so I literally make money on my expenses. Also, the loans are through 2 different lenders, so I'm only paying twice a month (not 6 times a month).


I'm not in a HUGE hurry to pay them off, but I'm planning on spending about $15,000 on an engagement ring in the next 6-9 months, which I already have the money for. I could just take the $25000 and finish up all my loans, but then I'd be financing the purchase of the ring come next summer! I'm also planning on purchasing a condo in Chicago in 3-4 years, but I'll be working with 2 incomes at that point .

Wowow. That's too much for a ring. Won't your SO be more appreciative of a debt free kinda guy and a very pretty 2-4k ring?

I know, I know, this isn't what you came here for... it's just reads like you are asking to be robbed by De Beers and I couldn't in good faith not scream out 'Don't do it!'

I had a hard time at first trying to justify a $15,000 ring, but I've come to the point that I'm completely okay with it. I already have the money saved for the ring, am continuing to save more money, and the only debts I have are student loans, which are (arguably) a "good" debt to have.

I'm not dipping into my emergency fund or taking out a payment plan to afford the ring. I'm completely funding a Roth IRA and am hoping to max out my 401k this year, and have my financial life on track.

And no, I don't think she would be more appreciative of a debt-free guy and a small ring. She's not a demanding person, but one thing she does want is a nice ring, and I want to give that to her.

Anything more than 1 carat is a waste, in my opinion, since folks often assume they are fake.

Another thing to consider is the fact that in the next 5-10 years, artificial diamonds that are completely indistinguishable from natural diamonds will start to come on the market and that $15,000 diamond is not going to hold its value.

Another thing to consider is whether you can save money by buying the stone wholesale and getting it set.

Too bad I'm not buying a diamond for you, tazdollars. It would be a lot cheaper My girlfriend would like a 2 carat diamond, so that's what I'm planning on getting.

I'm also not buying the diamond as an investment, so I don't care what happens with the artificial diamonds or DeBeers and their diamond monopoly, price fixing, and their ridiculous marketing to women.

And I'll definitely be buying the diamond wholesale (my brother has contacts with some wholesale dealers in NYC and actually purchased his engagement ring from one, and I have contacts with the same type of people in Chicago), and getting it set on a band that I create. I won't just be plopping down $15000 in a Jared's or some mall jewelry store.

I think you should buy whatever size/price ring you feel comfortable buying.

I have to agree that a 2 karat ring is a bit excessive. I bought a half karat from a jeweler here in the jeweler's district with a unique setting and it cost me about $2k, all paid in cash, and was well worth it. The setting is far more important, the way my fiance's ring is set up, the diamond looks much bigger (most people guess it's a 1 karat or more).

I dunno man, with loans like that, I don't know if I'd put $15000 towards a ring, but to each their own.

Everyone has different values. To me, the ring is an extremely important SYMBOL, not just an 'investment'. I love when people say, oh I bought a teeny weeny ring and she just loved it, and besides, we fool other people into thinking that its worth a lot of money. Except YOU know its not. And other people might think its fake? Who cares? YOU know its not. And he never said "i'm buying this ring to impress other people".

Anyway... I commend your forward thinking and planning on this big purchase. (And especially the part about not going to the mall!) I'm sure you've done your homework regarding the four Cs and all that.

The thing is... You didn't come on here for advice about engagement rings. Sometimes, we're a pushy bunch.

I'm glad there are still romantic guys out there. It gives me hope.

Sasper, Congratulations on killing some debt and on your impending engagement. I would kill the variable loans, also can you consolidate to get one loan at a lower rate?

I say you should buy whatever size/cost ring you want to buy. My only suggestion on the diamond is to not buy retail but instead find a local accredited gemologist to work with you. Mr. Sam bought me a lovely diamond using the assistance of a gemologist and he one learned a ton about diamonds which helped him in his final purchase and two bought a fantastic diamond for basically half price. He then used a jewelry designer to design the engagement band and setting (and wedding band) which cost more than buying a retail setting but with the savings on the stone he still came out way ahead. And the end result is that I have a lovely engagement ring (and wedding band) that is one of a kind and very different from the retail rings.

I love people who think that a ring has to be expensive in order to mean something. After all, it's a symbol.