US folk: loan consolidation

[danaeris]

Anyone have any choice advice about loan consolidation? I'm considering it as an option at the moment... Otherwise my monthly payments will be ~$210 USD, which is a bit harsh for someone of my means. I have perkins in deferment and subsidized stafford currently getting 3.37%. About twice as much perkins as stafford.

Comments

[tunape.livejournal.com]

You should read the terms of the loan consolidations carefully. Some will not allow you to defer payment if you go back to school. For this reason, I have not yet consolidated my loans, even though MIT loan's interest is at a whopping 8.9%!!(it varies from year to year, but that's the highest one).

Otherwise, consolidation is preferred since you do save a butt load on interest, and reduces your monthly payment.

[danaeris.livejournal.com]

Apparently that's not a concern with direct consolidation loans. But thanks for warning me; it hadn't occurred to me to check, and now I know that other consolidation programs might not be able to offer me those benefits.

I'm going to make an attempt to invest the cash I've got now at a higher interest rate than my loans are accrueing interest, and keep the loans for as long as possible in order to make an overall profit (rather than paying them off sooner).

[tunape.livejournal.com]

Direct consolidation allows you to defer? hmm... I should investigate again.

Your plan sounds excellent! Student loan interests are so low, there's really little incentive to repay them immediately. A good book on personal finance is "Personal Finance for Dummies". Basically, the first goal is to pay off your debt(high interest ones especially, credit cards, car, etc...). Secondly, make sure there's a safety buffer in case all fails. Thirdly, whatever is left should all be invested. Your investings can be high risk or low risk, but it wouldn't matter since you already have a safety buffer.

oh yes, finally, with your new job offer, put the maximum you can into retirement. most people dont' start saving until their 30s. however, the value doubles every 8-10 years. so, starting in the early/mid 20s will give you twice as much as starting later.

[angel-thane.livejournal.com]

however, the value doubles every 8-10 years. so, starting in the early/mid 20s will give you twice as much as starting later.

Not always, and especially not when you factor in RRSPs.

An RRSP is fully tax deductible from your highest tax rate. Which means the more you're making, the more you're getting back from the gov't (anywhere between 14 and 40%) Especially if somebody is expecting their salary to jump in the next few years, it is often better to wait a bit and let your RRSP contribution overpayment rise so that when you do contribute you can get even more money back. Given the amount of a tax deduction that this is, this can end up being worth more than the interest from the two or three years that you'r eholding off investing (espcially if you then re-invest that tax break)

[tunape.livejournal.com]

RRSP is a Canada thing? I was trying to make more general statements since I don't know all the ins-and-outs of Canada(nor really the US!). But yes, google confirms what you're saying. :)

[angel-thane.livejournal.com]

Yup, RRSPs are a Canadian (and I believe other countries as well) thing.