I know that there is no such thing as good debt, but I just graduated with my bachelors and will be making 55,0 a year and my interest rate on my loans are 2.5%. They payments are $665 a month for 10 years. I own my home and car and my only bills are utilities and my 4 year old son’s expenses, which are not a ton and my husband’s income pretty much covers that. I got the loans before I was married and it took 7 years to get the degree and we were both poor until his business took off last year. I have heard people say to pay $22 a month and get it done in 3 years, but then I have heard other say to build a home (which we need to because ours is falling apart and built in the 30’s). I have heard with an interest rate that low, it is best to just pay the monthly payments for 10 years and keep any extra money as a cushion. I want to build up our credit and I have also heard paying it off early could actually hurt my credit? So, should I just pay the payments as scheduled for 10 years and build my home, or should I just hold off on life for 3-4 years and pay off the debt early?
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Sounds like your current house is caving on you.
Sounds like you would like to move to a nice new small home.
1. It only takes 1 year of payments on any loan to build credit. So, you have that.
2. 25% to 35% cheaper to buy a home. Do not build.
3. Put 20% down on a home.
4. Always have at least 6 months of emergency living expenses in a savings.
5. Your combined incomes will have to be enough to support a mortgage & the debt.
6. Paying off a loan early does not hurt credit.
7. Have one credit card you use for gas and pay in full each month.