Save for move or pay off student loan debt?

Submitted by DapperAdhesiveness99 t3_z809wy in personalfinance

I am from Michigan and I plan on moving to California to switch things up. I’ve never lived anywhere else but here and I feel it in my heart that this would be a good move for me. I am a single man with no kids making around 65k/yr. My only debt is for student loans which is around 50k and my monthly expenses amount to $2376. I want to move when my apartment lease is up in Feb 24’. My original plan was to pay it off entirely in 23’ using half of my paychecks but with the student loan forgiveness plan being blocked (my debt would have been reduced to 30k) it will take longer than a year for me to accomplish this. I haven’t applied to any positions out there yet, but I am positive I can land a job paying greater than or equal to what I am making now. I’d hate to delay as I am getting older, but would it be wise to pay off my student loans entirely before leaving or should I pay the minimum and start saving aggressively for a potential move. Thank you.

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aust_b t1_iy91rqp wrote

It would entirely come down to opportunity cost. Would you actually be able to secure a high paying job which isn’t completely negated by the HCOL. Find the job first then run the numbers. Me personally after paying on my private loans for the last 3 years, I’d rather not have that payment, that’s just me though.

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jseams t1_iy92ec1 wrote

Where in California are you wanting to live? California is a huge state and the COL can vary tremendously depending on where you relocate. If you are looking at something like the Bay Area you are going to need to double, maybe triple, your current income to be comfortable. Everybody hears about how expensive it is out here, but the reality often doesn't hit them until they have made the move - which can often be too late.

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DapperAdhesiveness99 OP t1_iy92u91 wrote

Replying to aust_b (#771,139)

That is solid advice, thank you. I’d honestly love to be debt free as well. When the debt reduction was announced, I saw a clear path to the finish line. Having it blocked hurt my momentum. But I will definitely take your advice into account. Thanks again!

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DapperAdhesiveness99 OP t1_iy94be3 wrote

Replying to jseams (#771,301)

Thanks for your response! I am still researching which area would be best for me but I definitely don’t want to live in the more pricier areas such as San Francisco or even LA. That would be too fast paced for me lol I was thinking somewhere modest but with nice views and not to far from said cities. If I could choose barring cost, it would be San Diego for sure though.

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jseams t1_iy96gcq wrote

Replying to DapperAdhesiveness99 (#771,770)

San Diego is an awesome city. Significantly cheaper than the Bay Area for sure. I visited for the first time a few years ago and was blown away... a truly underrated city people sometimes forget about. I only spent a week there but we are now looking at retiring in that area at some point. Some of the cities around SD are incredible - we love Temecula. Anyhow, best of luck with your move!

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AznXKitty_ t1_iy9wsd7 wrote

You left out the interest rates on your loans. If they're low enough, then I'd suggest just keeping the loan and put the extra money into a HYSA. They're at close to 3% right now. Ymmv

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DapperAdhesiveness99 OP t1_iy9xuw5 wrote

Replying to AznXKitty_ (#778,262)

Thanks for your response! The current interest rate on these loans is 0% because of the payment freeze which could last up until June of 23’. After payments resume, I am looking at an interest rate of between 4.4-5%. I currently have a HYSA through Marcus that I could pour into. That’s not a bad idea.

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AznXKitty_ t1_iya3xf0 wrote

Replying to DapperAdhesiveness99 (#778,459)

Look at it this way. You're paying 1-1.5% interest to have your money rather than pouring it into paying off this loan. You can calculate how much that is monthly/yearly and decide for yourself if it's worth it.

And between now and the payment resume day, you keep that 3% yield completely

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