I’m torn I don’t know what to do. I essentially have $25K in student loans, this is my only debt. I am able to save about $2k every month. I am torn because I have not yet figured out the ratio of debt payoff to future house savings that I am comfortable with. My minimum payment is $178 a month for the next 20 years on the student loan. I currently make double payments every month which has my student loans being paid in full in approximately 8 years.
I am determined to buy a house within the next two years and have a goal of having between $50-100K in the bank by the time I do that. I currently have $12k in savings and have been stock piling that cash as I am not completely sure what I want to do with it. If I was super intense I could use $7K of my savings and then throw all $2K each month at the student loan which would mean it would be paid off by the end of the 2009. However, doing this puts me three to five years away from buying a house. Although I hope to have about $75K in savings when I do buy a home I have no clue how much of that I will actually put down (too many unknown factors like interest rates, house prices, job security, etc). I do feel like I should throw as much money at the student loan as possible because that 7% interest is no fun. I would be getting a guaranteed 7% return on every dollar I put towards it…which is faaaaaaaar better than my online savings, Roth IRA, or 401K have been doing.
I guess I shouldn’t complain to much…at least this is a good problem to have. I just am unsure at this point in my life how to make that $2k in savings work best for my goals.