Do you live within your means?

[Schneed10]

I live within means. 13% of income is saved towards retirement, 6% is saved towards my daughters' college educations, and another 5% or so is saved just to grow the cash balance.

Only debt is the mortgage and 1 car payment, the student loans were paid off a few years ago. Best thing I ever did was live at home with my parents for the first 15 months after graduating college. Took my salary that year and paid down student loan debt. Allowed me to get it paid off by age 27. I'd advise any college kid saddled with more than $10K in student loan debt to do the same, which I know includes an awful lot of college kids.

[mlmpetert]

Originally Posted by Schneed10

I live within means. 13% of income is saved towards retirement, 6% is saved towards my daughters' college educations, and another 5% or so is saved just to grow the cash balance.

Only debt is the mortgage and 1 car payment, the student loans were paid off a few years ago. Best thing I ever did was live at home with my parents for the first 15 months after graduating college. Took my salary that year and paid down student loan debt. Allowed me to get it paid off by age 27. I'd advise any college kid saddled with more than $10K in student loan debt to do the same, which I know includes an awful lot of college kids.

I big time disagree. You can deduct up to 2.5k of student loan interest right from the front page of your 1040, as long as you make less than 70k. If you have more than 2.5k of loan interest then pay it down to get to that level. I think paying off all other debt, saving up for a down payment on a house, building a cash reserve, or stating a Roth or contributing to your 401k if theres a match should be priorities over paying down student debt. Let it ride till you (hopefully) make too much…

[Schneed10]

Originally Posted by mlmpetert

I big time disagree. You can deduct up to 2.5k of student loan interest right from the front page of your 1040, as long as you make less than 70k. If you have more than 2.5k of loan interest then pay it down to get to that level. I think paying off all other debt, saving up for a down payment on a house, building a cash reserve, or stating a Roth or contributing to your 401k if theres a match should be priorities over paying down student debt. Let it ride till you (hopefully) make too much…

From a tax perspective that makes sense, but from a cash flow perspective most kids aren't going to have the income to both pay off student loans and save up for retirement/houses.

Unless you're saying they should stay home with mom and dad to sock away money to buy a house, that I can get on board with. But only if there's enough cash flow to sustain mortgage payments and student loan payments when out on your own.

There's too much focus on the income statement in the heads of Americans, and not nearly enough on the balance sheet.