Anonymous User wrote:Debt - 70k
Salary - 145
I want to use SoFi or a similar service. I start work in September, so when should I go about contacting them?
Also do they allow prepayment?
I want to be aggressive with my loan and knock it out in a couple of years. Originally I was going to throw my 8k in savings I have at my grad plus loans right off the bat and then live of credit card until my first paycheck. If I plan on using SoFi, should I ditch this plan?
Also, if using SoFi should I just ride out the term and not be aggressive?
I'm conflicted on what I should do. Not sure how long I will be in big law and my S/O want to buy a house after next year.
S/O with ~50k salary and ~50k debt.
I don't know about prepayment, but I see no reason to wait on contacting SoFi: your loans are accumulating interest, so the sooner you refi, the better.
Don't live off of credit cards unless you have some 0% APR deal going. The interest rates on your credit cards will be > the interest rates on SoFi.
Regarding being aggressive with SoFi, well, it all depends on your risk tolerance. Assuming you get something like a 5% 10-year fixed rate loan with SoFi, it's probably more likely than not (but far from guaranteed) that you could beat that in the private market. That said, investing when you still have loans = leveraging your money, which is a risky strategy. Personally, I'd treat your loans like part of your investment portfolio. The benefit of your loans is that you can guarantee yourself some interest rate gains by paying them off faster. The cost is that by paying off your loans, you lose liquidity. For your particular situation, because you may want to buy a house in a year or so, I would discourage you from paying off your loans particularly aggressively: you'll need to save for a down payment on your house. This also means that you should not be investing your money as aggressively as you might otherwise (because you'll need it in the next year or two, you should be making lower-variability lower-risk investments).
Personally, if I were in your shoes, here's what I would do:
(1) refi with sofi or DRB or common bond ASAP
(assuming you get a good interest rate). Put your loans in some combination of 5- and 10-year fixed depending on your budgetary flexibility (and be cautious -- you never know how having a baby, losing your job, etc, will impact your ability to pay off your loans);
(2) pay the minimum on your loans over the next 1-2 years while saving aggressively for a house down payment
, put that savings in something like Vanguard mutual funds with an approximately 70% bonds / 30% stock balance (more weighted towards bonds if you're less risk tolerant, more weighted towards stocks if you're more);
(3) after you buy your house (or if you decide you're not going to buy a home anytime soon), then you can start considering how to balance your savings / loan repayments. Personally, if I were in your shoes at this point, I would treat my loans as part of my portfolio
. So if you want to have a 50/50 bonds/stock balance (e.g., an asset allocation designed for neither the particular long- or particular short-term), consider putting the 50% of your "bond investment" funds into paying down your loans instead of actually buying bonds -- I think you'll find that the guaranteed interest rates of your loans will equal or beat the non-guaranteed rates of bond-based funds (and the short-term liquidity you'll lose won't matter if you're not investing for the short term).