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Save more or attack student loans

Chris Farrell Jun 22, 2009

Question: I am trying to balance saving enough money in case I lose my job and paying down my current (and increasing) student loan debt. I work full time and am a part-time law school student. I have pre-existing school loan debt from another graduate degree (about $45,000). Now, I’m accruing more by attending law school. The pre-existing loans are deferred, but I could still make payments since I’m working. I am not sure how to balance making sure I have enough savings and paying off the debt. Right now, I have a solid 10 months of expenses in savings (not counting any of my retirement savings). Should I stop worrying about the savings and start paying down the school loans again? Rebecca, Hoboken, NJ

Answer: As you well know, the cost of living in the New York City area is expensive. It’s impressive that you’ve accumulated a solid 10 months in savings. It’s a decent financial cushion for anyone. It’s a judgment call, but a key for answering this question is this: Is your job is really at risk or are you just feeling the general unease we all have about our jobs during the economic downturn. Assuming that you are reasonably secure in your job I would start paying down the student loans again. And then you can get even more aggressive when you get a job as a lawyer.

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