Ask Money

A small raise: Now what?

Chris Farrell Aug 12, 2011

Question: I should be getting a addition to my (meager) salary soon. At the moment, I can barely make ends meet, especially during the winter. What should I do with my extra money? Is it more important to save it, or to devote it to my student loans?

My loans, by the way, are substantial, and weigh heavily on my mind. I only manage to pay a few hundred dollars in principal over the course of the year. On the other hand, my savings account usually ranges from $500-$2,000 in any given year. Theresa, Chicago, IL

Answer: Winter isn’t that far off, at least for the upper Midwest (sad to say). I would focus on building up your cash cushion with the extra income. Hopefully, you won’t be as financially stretched as before during the city’s chilly months.

I know that a large student loan burden is oppressive, financially and emotionally. But I would tackle it more aggressively once your personal safety net is healthier.

I would look into shifting into a different loan repayment plan, such as the Income-based repayment Plan? It might give you additional financial relief for now. You can learn more about the IBR here. A good resource for exploring all your repayment options is

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