Thursday, August 05, 2010
Ok, I need some opinions. I was awarded $20,000 worth of student loans for the 10-11 school year. I will get half of that for the first semester and half for the second semester. My actual tuition and fees for my graduate classes this year are paid by my county through the teaching cohort and the scholarship I got, so I wanted to use the student loans to help out in other living expense areas. Do you think it would be good to pay off my major credit card ($7,000 worth of debt, 12.99% interest, right now I have $150 minimum monthly payments, but I always pay $200) and then use the rest towards my car ($350 a month payments, have paid for a year on a 5 year loan... payoff amount right now is $14,600)??? My thoughts were that paying off the student loan has a better interest rate and doesn't look as "bad" as just a regular credit card debt. Plus if I put more down on my car then I'll save on that interest in the long run. I have $5,000 worth of student loan debt from undergrad ($50 monthly payments that will go into deferment because I'm a student again). I'm just not sure what to do.
Right now my bills are more than I am making, which forces me to pay things on my credit card, which requires higher payments, which I can't afford... so it's a terrible cycle. I'm also thinking about reducing my car insurance, but I'm not sure what to do about that. My car is an 09 Honda Fit. I bought it new on the 4th of July. I have full coverage and low deductibles. I pay $980 every 6 months, which will probably go up because they are probably going to take away my good student discount since I'm not a full-time student anymore. My bodily injury liability is a $20,000 limit/$40,000 deductible; property damange liability is $15,000; personal injury protection is $2,500 limit with a waived deductible; uninsured motorist bodily injury is $20,000 limit and $40,000 deductible; uninsured motorist property damage is $15,000 limit and $250 deductible; comprehensive is $50 deductible, collision is $250 deductible; and rental reimbursement is $30/day limit with a $900 max. It seems like the most expensive parts of the premium are the collision, property damage liability and bodily injury liability. I'm scared to have less than full coverage or increase my deductibles because if something happens I can't pay more than that. Last year when I was driving to school one early, tired morning I didn't make a turn wide enough and scraped the side of my car on a concrete one-lane bridge. Getting it fixed was very hassle-free and didn't cost me a lot. I'm afraid if something happens like this again or if there's an accident I won't be able to afford to get it fixed. However, is this a stupid thought because the amount I am paying now for insurance is more than it would be to fix it??? I know full coverage provides roadside assistance in the situation that my boyfriend isn't available to help me and also covers theft, vandalism, and acts of mother nature. When I was younger someone in my parent's neighborhood spray painted my car and I'm afraid of a falling tree at granddad's in the middle of the country, so I like knowing that I'm taken care of. What do you think?? I don't know a lot about this.
I have health insurance, vision, and dental through my job, which is taken out of my pay... so I don't really look at that as an extra expense because I never see the money. I get $1,000 bi-weekly from teaching, which really is not enough. I make "40k" a year, but last year when I did taxes it said that I brought home 23k after everything. Rent is $775 a month, cable/internet is $150, cell phone is $89, electric averages to about $50 a month, utilities is about $50 a month, not to mention groceries, gas, etc. So I guess I'm trying to see what I could cut and thought perhaps my car insurance could be adjusted or if it would be a good idea to use the student loan money towards the one credit card and my car. Any thoughts would be appreciated. It's stressing me out.