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That is a nice looking wrench

January 28th, 2018 at 08:56 am

I did my taxes last night. From what I understand, I didn't make enough in the year to be taxed much, plus with the two kids, taking out too much from my paychecks since I wasn't sure how divorce would pay out... I am getting a LOT back. To the tune of $9k. Still in shock.

This completely revamps my 2018 goals. I am almost panicking. What will I do with that cash?!? Part of me just wants to put it straight towards house down payment and start looking. The other part of me wants to follow the plan. The third part of me just wants to wipe out a huge chunk of the financial aid student loan. The last part of me wants to spend it on things I don't need.

Logical me goes- use to to pay off a chunk of the studen loan. Just do it. Get it gone, one less thing to worry about. I am not quite ready to buy a house yet, so while the money would be wonderful towards that, it would be sitting there not doing much for quite some time.

AHHHHH! I should just pay off the entire student loan. I can if I take a bit of my extra in the savings for the program and the refund and the extra that I will be getting this semester after paying tuition....

It will delay my starting for saving for a house by 3 months, but I think I am ok with that. Am I ok with that? Yes. No. Oh, I don't know!

Luckily I have some time since taxes aren't being processed until tomorrow, and WI taxes are a few days behind that. Plus I haven't received my financial aid refund yet.

Logically, need to get rid of student loans. Evil, necessary things, be gone!

8 Responses to “That is a nice looking wrench”

  1. PatientSaver Says:

    Are those student loans private or federal? What's the interest rate?

  2. creditcardfree Says:

    Well that is a very good problem to have! If you want help deciding from me, I would want to know what your current student loan payment is? What is the interest rate? What is the amount you are trying to save for your Master's and the house downpayment? Also will you end up changing your withholding so the large refund isn't an issue next year? Are you sharing the boys with your ex in regards to filing? For example, will he claim them next year?

    A $9K refund if you change your withholding appropriately and expect a similar tax situation could mean an extra $750 more in your pocket each month.

    Consider that even if you put the $9K on the student loan, you don't have to pay it in full now, you could still make that happen after saving for the house. Remember none of it is either or, you could put a little towards all your goals. I'm also assuming you have an emergency fund...you would need that in place before buying a home anyway.

  3. crazyliblady Says:

    First, a few questions. Do you have any debts other than student loan. What is the interest rate on it? If you have any other debts, I would pay those first. Then, I would build up an emergency savings account. The amount depends on you. Then, I would make a big payment on the student loan. I would also refinance it at a lower rate, if possible. That could free up some cash monthly for your other goals, like finishing your degree. And yes, I would pay off the student loan before applying for a mortgage. That accomplishes two things: 1) frees up more space in your budget so you can make mortgage payments and 2) since it lowers your total debt, you may get a better rate. Then, I would save money for a down payment on a house.

  4. rob62521 Says:

    I'd say you have a good problem. Not knowing all the specifics, just going on what you wrote, I'd pay off those darn student loans and move on. If it delays you three months on the home, I'd say it would be OK since in the greater scheme of things, you are paying three months less of interest on the loans.

  5. elitaylor646 Says:

    No other debt. $1k set aside in EF-specific fund. Saving $10k for rest of Masters (currently at $3k+). Down payment is at minimum to be $20k. Have $3k saved already.

    Student Loan debt is as follows:
    Interest 6%
    Principle: $13,830 + accrued interest $202.47 for a total of $14,032.47.
    Current payments: none due to differed since I am in school. Current estimate is $96/month.

    As for taxes, I don't think this will happen again. I was partially employed for the year and had single rate taxes taken out. I have since changed that and will be employed for the whole year at a higher tax bracket. This shouldn't happen again! I don't like giving the government that big of a loan!

  6. creditcardfree Says:

    When is the money due for your Master's? From your last post it seems that you plan to save $250 a week through May...ending up with at least $5K, so you will be short of the $10K if it starts this year or early next. I do think that should be a priority if that bill is in the next year. Of course, I may not have all info here.

    If you follow Dave Ramsey's baby steps, he would tell you to pay off the student loan. Then save the rest of your 3-6 month emergency fund, then save the $20K for the house. I do highly advise to have more than $1K in EF before buying a home.

    If it were me, I'd ear mark $7K towards the Master's, or whatever amount that gets you to the $10K you need. This is assuming this is due in the next 12 months or so. If longer, I might think different.

    My next step would be to start putting $250 a week towards the student loan, plus the $2K from the tax refund. This would be paid off by this time next year or the very end of 2018. After that bank all money towards EF and house down payment.

    The reason I'm putting the Master's money first is that it keeps you from going further in debt or having to delay getting your Master's. But paying off the loan first wouldn't be bad, since you wouldn't pay as much interest. I guess it maybe depends on which gives you more piece of mind.

    Good luck!

  7. scottish girl Says:

    Wow, that is a good problem to have. I agree with CCF. Or you could put some money towards both. Hmm. Good luck with whatever you decide.

  8. frugaltexan75 Says:

    Whenever I come into extra money, I like to use the equation of 1/3 - one part to the to the past (debt), one part to the present and one part to the future. Takes a lot of stress out of it for me.

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