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#74: Ask Paula – How to Repay $50k in Student Loans on a $31k Income, What’s the Deal with Bonds, and Do I Really Need Insurance?

ByPaula Pant

This week, my friend and former financial planner Joe Saul-Sehy joins me for another round of Q&A in our (newly!) biweekly segment called Ask Paula!

Kicking off today’s episode, Nicky asks:

I’m young and healthy. My car is old and not-worth-much. And my personal property isn’t exactly fancy-pants.

Do I *really* need health, auto and property insurance? Or can I drop these insurances and save the money?

Next, Shelbi explains her current situation:

I’m 26, recently earned a graduate school diploma, and I’m taking the first steps into my career.

I take home $2,600 in monthly income, and my cost-of-living is $1,900 per month.

I maintain a $5,500 emergency fund and invest 20% of my income into a Vanguard Target Date Retirement account, with a Roth tax setup. I’ll get an employer match after I’ve spent another year on the job. My employer also contributes $100 per month into my H.S.A. account, which is the only money that I’m putting into that fund.

I hold $49,000 in student loans (yikes!!) at 6.8% interest. I pay $400/mo towards this debt, which is included in my $1,900 cost-of-living and is more than the minimum required.

My goal is financial independence and early retirement.

Shelbi asks three questions:

  • Should she lower the 20% she’s putting into her 403b in order to max out her Roth IRA and HSA, instead?
  • Should she prioritize repaying her student loan debt over retirement savings?
  • Should she schedule a private coaching call with me? (Surprisingly, I said no. Tune into the episode to find out why.)

Next, Nicole asks:

What types of investments can you hold inside a self-directed IRA? If I open one of these accounts, what custodian should I use?

Finally, anonymous asks:

What’s the deal with bond investing? What’s a coupon payment? A maturity date? WTF? Can you help me make sense of the world of bonds and bond funds?

Joe and I tackle these four questions … plus reveal a top-secret recipe for the Best. Oreo. Cookie. Dessert. EVER.

Like, ever.

Enjoy!

— Paula

Resources Mentioned:

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