Advice Needed - School Debt

I'm a college freshman with $5,343.73 of debt. $3,604.00 from a student loan, $1,100.00 from taxes which are due on the 17th, and $429.99 and $209.74 from 2 credit cards respectively. I have a full scholarship at my school, and whatever money isn't spent on school/housing goes to my pocket. My parents have put $0.00 into my college education, and I'd like to keep it that way. After its all said and done, I will have roughly $8000 after tuition is paid off. I'm moving off campus so $4000 will go towards housing/living expenses. With this $4,000, should I stick it towards all my debt and just have it all paid off, or should I invest it (if so, in what) and use the returns to pay off the debt (assuming I have returns). Your input is greatly appreciated.

 

Absolutely pay off your taxes and credit cards (how the heck do you have taxes as a freshman?? Any school tuition you pay (this INCLUDES with loans) give you a tax credit of 20% of the amount paid - There are also other tax credits/deductions for school (also, I've been on my own 100% from my parents also - kudos to you)).

Assuming the loan is on good terms, leave that until after graduation. Absolutely save the credit cards for emergency use.

 

Well my senior year in high school i interned with General Motors and was pulling in $400/week and since I was filed as "self-employed" according to GM, it was my responsibility to save up and pay my taxes. They didn't deduct. So I made roughly 7,000 my last semester in high school and of that, 1100 has to be paid in taxes. kind of stupid if you ask me.

 
Money10:
Well my senior year in high school i interned with General Motors and was pulling in $400/week and since I was filed as "self-employed" according to GM, it was my responsibility to save up and pay my taxes. They didn't deduct. So I made roughly 7,000 my last semester in high school and of that, 1100 has to be paid in taxes. kind of stupid if you ask me.

How poor are you?

 

The amount of "disposable" income you currently have ($4000) is not what a prudent investor would consider highly investible assets.

If I were you, I'd pay the IRS indebtedness immediately. Then pay off that $200 in credit cards. That leaves you with about $3000K no? I wouldn't invest that, instead I would tuck that away into a CD for now.

You just never know what sort of incidental expenses might come up in the next few months or year.

 

Agree w/ aad, anything under $10k is not worth investing, esp. on your own. Maybe even better than a CD is an online savings account (Emigrant Direct, ING Direct, etc.). You can get rates that are comparable to a CD at your local bank without having to have your money locked up. Of course, it requires self-control to not dip into it. If you are expecting incidental expenses, then I would stay away from a CD as you will be charged a fee to take your money out.

 
Money10:
and why shouldnt i invest 4k?
You shouldn't "invest" it per se in any stocks on your own because you can't get significant diversification and the transaction costs will detract from your gains via your cost basis, since you will only be able to buy a relatively small amount of shares. The mutual fund route is better, but you don't need to worry about the hassle there. Put your money in a CD or high-yielding savings account so you have quick, easy access to your money in case of an emergency but still earn some decent returns. If you are adamant about investing, look into an index fund, esp. Vanguard. Just my thoughts.
 

do yourself a favor. take that 4k, join the frattiest frat on your campus. it will pay dividends that last a lifetime and you will make the most of college. your ROI will be far higher than any paper assets if you join a frat.

 
patekphilippe:
do yourself a favor. take that 4k, join the frattiest frat on your campus. it will pay dividends that last a lifetime and you will make the most of college. your ROI will be far higher than any paper assets if you join a frat.

Why do always bring frats into the mix? You must be one of those frat reject types. You don't try to be a frat guy- you are or you are not. You clearly are not.

 
JackDole1029:
patekphilippe:
do yourself a favor. take that 4k, join the frattiest frat on your campus. it will pay dividends that last a lifetime and you will make the most of college. your ROI will be far higher than any paper assets if you join a frat.

Why do always bring frats into the mix? You must be one of those frat reject types. You don't try to be a frat guy- you are or you are not. You clearly are not.

Maybe he can join one of the blue collar frats?

 

Dude... no one said anything about being poor. You're a college freshman, unanticipated expenses will arise. That's all I was advising - tuck some money away first into savings before investing.

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