<p>Very soon all the financial aid numbers will come in and students will wrestle with the question of how much in loans they will need to take out to attend each college. They need to have a realistic understanding of how much they might make after school, the amount of money one will need to live independently, interest on loans and loan payments and investing. Each could and should be its own thread. I thought I would just touch on investing for a minute.</p>
<p>Monstertrak.com has a nice little paper on line about “surviving your first year on the job”. In it they give this example:</p>
<p>Sally and Frank are each 22 and plan to work until they are 65. Sally invests $2000 a year at 12% for 6 years and stops. Frank spends $2000 a year for 6 years then invests $2000 a year at 12% for the next 37 years. Sally invested $12,000, Frank invested $74,000. At age 65 the money they invested has accumulated to $1,348,440 for Sally and $1,363,780 for Frank. Pretty close.</p>
<p>Will you have money to invest after college or will you be using that money to pay off student loans?</p>
<p>Budget : Your mileage may vary :Feel free to comment</p>
<p>Avg salary: $45,000<br>
Taxes $7000
rent $600 x 12= $7200
heat/electric/water $300 x 12= $3600
food $550 x12= $6600
cable $50 x 12= $600
cell phone $50 x 12= $600
internet $40x12=$480
Car $225x12=$2700
Gas $150 x 12=$1800
Clothes $100x12= $1200
Bday/holiday gifts $400
Dr/Dentist co-pays $300
Medical Insurance Premium for job $200x12= $2400</p>
<p>Leaves us $10,720 or $893 a month</p>
<p>Want to take advantage of your 401k and save for retirement?
Want a saving account?
Have Credit card debt?
want to but a coffee everyday?
a movie, lunch out, pizza, a date? </p>
<p>And oh,yeah, wait! How much do you owe a month in student loans??? </p>
<p>For every $10,000 in student loans you owe expect to pay $115. a month for 10 years to pay it off at 6.8%
Getting the picture yet?</p>
<p>Nice thread sax. Hopefully, the folks who come on asking “how much debt is too much?” will take this info to heart.</p>
<p>These all seem to be VERY realistic numbers. For those who have expounded the rule of thumb of the debt no greater than a one years salary… Which I still think is reasonable (but an absolute max) $45 k of debt = $517.50 a month debt payment month yields you about $376 a month to spend on frivolous things like yer fancy coffees. </p>
<p>Go out to lunch every day? Probably not. Only item I saw missing was car insurance. </p>
<p>I also saw a cool calculator on bloomberg.com that estimated a savings rate that would yield you a cool million.</p>