[Luv2BeFrugal]

I'm trying to decide next steps in my debt payment/budgeting journey.

I have a 6 month emergency fund, my vehicles are paid for, no CC debt.

My next step was to start working on knocking out student loans.

With the current environment, I'm not sure if I should go ahead and work on them or just sock every penny away until this pandemic passes?

Right now, my job is likely okay, but not 100% solid. They just cut our pay 10%, which I can live with... Again, emergency fund in place.

I keep going back and forth on which path to take (pay extra on loan or save). Payday is tomorrow...

Thoughts? TIA.

 

[mndtrp]

Personally, I wouldn't be spending extra unless my job was more than "not 100% solid". If I was in a situation like you state, I'd be saving it until the times have changed. If I still wanted to make extra payments at that point, I'd take the money out of savings and make a large lump payment. Put the savings in an online account that generates some interest, and it won't be a total loss. I also wouldn't be surprised if some sort of loan forgiveness pops up within one of the stimulus packages.

 

[Contrary Housewife]

I would make regular payments until my personal situation stabilized. If I thought I was about to be unemployed, set aside any extra as savings right now -- you can use it to make lump payments later -- and look into student loan deferment in case you do lose the job.

 

[Luv2BeFrugal]

We had a call (meeting) this afternoon. They may reduce our workload and our pay 10% (would be temporary, until things pick back up), but sounds like full layoffs are off the table for now.

That said, if any of you hit a certain threshold of emergency savings (a value or a number of months of living expenses) would you continue making payments on debt? Or, would you continue to just save?

I think what's getting to me on the "just save for now" side of things is that, although I am ALL for saving for a rainy day, there isn't going to be a vaccine for this for 18 months and my employer has had uncertainty for a couple years, already (thus, saving a 6 month emergency fund before paying off debt).

If I had a goal of "save $x for emergencies" and then press on with debt I feel like it would be more of a goal vs an open-ended (unending) standstill sort of feeling.

 

[gaja]

I would pile up the money until the storm blows over. As long as you pile it up and don't spend it, you can use it to pay down the student loan in some months when we get back to normal. As a goal, you could choose to save up enough to cover the loans? That way you could both have the security of a large emergency fund, and the knowledge that you can become debt free when you choose to.

 

[MaggieTru]

yep. I would make the required payments and sock away any extra. We don't know where this is going or whatelse might happen while the pandemic is running in the background. Like those who lost homes and businesses to the tornadoes down south this week. If your employer had a disaster like that, would they keep you on? Would there be another job out there right away?
right now I'm thinking of the pandemic as extra incentive to save save save. My employer has us on full salary at the moment, but it is not sustainable for more than a few months at best. If this goes longer or there is a longterm recession/depression as well, we may see pay and/or jobs cut. So, I am cutting the bills as I can.

 

[Luv2BeFrugal]

I would pile up the money until the storm blows over. As long as you pile it up and don't spend it, you can use it to pay down the student loan in some months when we get back to normal. As a goal, you could choose to save up enough to cover the loans? That way you could both have the security of a large emergency fund, and the knowledge that you can become debt free when you choose to.

I could make a goal to save enough to pay off the state loan I have. The federal loan will take me about 2.5 years of intense payments.
I like the idea of having that as a goal.

yep. I would make the required payments and sock away any extra. We don't know where this is going or whatelse might happen while the pandemic is running in the background. Like those who lost homes and businesses to the tornadoes down south this week. If your employer had a disaster like that, would they keep you on? Would there be another job out there right away?
right now I'm thinking of the pandemic as extra incentive to save save save. My employer has us on full salary at the moment, but it is not sustainable for more than a few months at best. If this goes longer or there is a longterm recession/depression as well, we may see pay and/or jobs cut. So, I am cutting the bills as I can.

Yes, if there was a natural disaster, my employer would keep us on (global, publicly traded company). Company is under duress from the slowdown - conserving cash, etc. Like many.

Well, "right away" is relative. It tends to take 3-6 months for the interview/hiring process for what I do. I worked with a recruiting firm for placement in this position and they would be happy to place me into another, if ever needed/wanted (I reached out to confirm). The key would be if the economy is strong enough to be hiring.

Yes, agreed...the long term outlook isn't exactly spectacular. :concern: I expect things to be tight for at least 2 years in the economy.





Sounds like "sock it all away" is pretty unanimous. I'll go with that and keep the idea of saving for a lump sum payoff of my state loan when brighter days come!

 

[Anna43]

I would keep making the monthly loan payment, but not pay extra. As others have said you can always do a lump sum later.

No matter how secure you believe your job to be, than can change in the blink of an eye. BTDT. I would continue building savings incase things continue downward and you do lose your job. Hopefully that won't happen, but better to be prepared rather than caught unaware.

Another point with 6 months living expenses in your emergency fund. Did you consider having to pay health insurance premiums should you become unemployed? When my dh lost his job due to business closing and couldn't find another due to his bad health, we lost 2/3's of our income and suddenly were paying $750 a month for health insurance. We paid that for 18 months and when it ended had to pay for individual policies which did not cover pre-existing. Not a happy time. We'd thought we were prepared but hadn't factored in that $750.

 

[rujerro]

I'd make the required payments on the loans and that's all. I'd even consider a side hustle to make up for the lowered income.

 

[Tirion]

Pandemic it's a great time to expand your business.

 

[madhen]

I'm in a similar situation, in that I am planning to retire at the end of the year. I keep debating whether to keep that plan, or to stay employed. The latter will obviously keep the income coming in. I will have a decent pension/annuity when I go, regardless of when, but the full salary is still nice. But I am well overdone in terms of being ready to leave, and I don't know if the stress is worth the money. Happily, I was able to refi the house to a 15 year fixed at several % points lower than my original loan, so I am in good shape there. I have decent $$ in savings (7 digits), but I will have to live on about 70% of what I am living on now. Also, I am about 10 years from getting social security to supplement my pension. My employer also provides me with a cell phone, a vehicle, and gas for that vehicle, so those will go away. But so will the constant travel (which admittedly has stopped for now), the constant demands on my time (I am on call 24/7), and the numerous missed appointments, birthdays, etc. due to last minute changes in my schedule thanks to work calling.

 

[Tirion]

Pandemic it's a great time to expand your business. I recommend you use https://www.tropare.com/b2b-prospecting-tools-for-field-sales.html

Seems interesting.