I suck at financial stuff

jawright · September 29th, 2006, 22:29

I've been saving about $1200/mo. toward my commercial, but I really want to start flying soon so I can get it done before May. If I took out a loan, I could pay it back as my paychecks come in.
I figure if I pay $3500 out of pocket and then take out a loan for another $3500, that should cover me (my FBO charges $175/hr for dual in a 172RG).

How hard is is to pay back a $3500-$4000 loan if you have roughly $600-$1200/mo. to spend on repayment?

desertdog71 · September 29th, 2006, 22:33

Quote:

Originally Posted by jawright

I've been saving about $1200/mo. toward my commercial, but I really want to start flying soon so I can get it done before May. If I took out a loan, I could pay it back as my paychecks come in.
I figure if I pay $3500 out of pocket and then take out a loan for another $3500, that should cover me (my FBO charges $175/hr for dual in a 172RG).

How hard is is to pay back a $3500-$4000 loan if you have roughly $600-$1200/mo. to spend on repayment?

Save for 6 months and then pay cash. Still be done by May.

Captain_Bob · September 29th, 2006, 22:37

...and... get it done in a 152 or older model (cheaper) 172. Just use the RG for the minimum Complex required.

That alone will save you a few grand.

Bob

dingo222 · September 29th, 2006, 22:55

Disclaimer: I'm no financial planner, loan officer, investment banker, broker, or anything else.....I did stay at a holiday inn express once (thanks crew scheduling)

what kind of loan are you taking? If it's an education loan like a stafford, or a key loan, the payments should be low and spread over a longer term. If it's from "uncle Louie" the loan shark, you may need to get it back a bit quicker. I still have like 7G worth of student loans from college through Salie Mae, and I'm paying 81 a month or something like that over 8 more years. A key loan should be about the same.

Now here is the deal from my point of view. Pay as much as you can afford up front, to reduce the amount you have to borrow. But, don't pay so much out of pocket that you have none left to live on. Get a good interest rate if possible, and pay down the balance of the loan ASAP. I make 2 payments month on an FO salary, sometimes 3 payments a month. Interest rates fluctuate and have been on the rise recently. It's easy to ride a 10 yr repayment plan, but if you look at a how much you are paying in interest over the term, you'd probably be shocked. By all means, do not default!!!!!!!!!!!!!!!!!!!!!!!!!!!!! If you can't make a payment, call the loan company and tell them! THey are usually flexible if they know what's going on. If they don't, you may default on the loan and you will not borrow any money from anyone for a long time after that!

I'd also make sure that you are borrowing money to reach a goal that will produce money in return. If you have a regular job and just want a rating, that's fine. But if you are looking at flying for a job, will the commercial rating get you to a place where you can earn income, or will you also need to borrow for a CFI rating, multi, or whatever. Take all that into account, and the cost of living while you are training. Add 25% to whatever number you come up with just for comfort.

If you get the chance, put the loan money in some sort of interest bearing account. Too many people have put all the money on account at the school, only to have the place close its doors. Don't do it in the newest, coolest plane the school offers. Just get it done.

Best of luck!

MusketeerMan · September 29th, 2006, 23:47

Quote:

Originally Posted by jawright

I've been saving about $1200/mo. toward my commercial, but I really want to start flying soon so I can get it done before May. If I took out a loan, I could pay it back as my paychecks come in.
I figure if I pay $3500 out of pocket and then take out a loan for another $3500, that should cover me (my FBO charges $175/hr for dual in a 172RG).

How hard is is to pay back a $3500-$4000 loan if you have roughly $600-$1200/mo. to spend on repayment?

That's a pretty high rental price for the RG. Use a fixed gear/fixed prop for all of your training. Just get the 10 required hours in a complex and do the checkride in 2 planes...I did it and it worked great!

jawright · September 30th, 2006, 00:43

Quote:

Originally Posted by MusketeerMan

That's a pretty high rental price for the RG. Use a fixed gear/fixed prop for all of your training. Just get the 10 required hours in a complex and do the checkride in 2 planes...I did it and it worked great!

I'm definitely going to do the minimum time in the RG. It's $114/hr. plus $55/hr for instruction. Most places around here seeem to charge about $115 for a complex. The sucky part is most of the other planes are 172SP's that are only $1 cheaper to rent. I could just go to a different FBO for my CSEL, but up until now I've liked where I am and want to instruct there...

Is it possible to be TOO anal/worried about where you train??

montanapilot · September 30th, 2006, 01:53

damn thats theft. $175 an hour will get you a twin with instructor out here.

jawright · September 30th, 2006, 01:59

Yeah, but from what I understand, this place uses the $55/hr to actually PAY their instructors.

slushie · September 30th, 2006, 03:37

www.bankrate.com

go to "calculators" to figure out payments

EDUC8-or · September 30th, 2006, 07:59

I've been there, as much as I wanted to just get things done I saved as much as I could while hitting the books hard and then rolled into the flying as soon as I had the cash.

Also, I would reccomend getting your CFI before the multi commercial. I wasn't sure if that was your plan, but that way you can start instructing and get an employee discount on a twin and then for your CFII and MEI.

jawright · September 30th, 2006, 09:34

Quote:

Originally Posted by jawright

It's $114/hr. plus $55/hr for instruction.

Oops, that doesn't add up. The rate sheet has the hourly rate and the block rate. At the block rate, it's $114/hr+$55 instruction for a total of $169, hourly is $120/hr.+55 for $175. It was late when I posted.

Thanks for the help guys. I want to wait for the cash, except I've been offered this summer job that starts at the end of May and is kind of a big deal. I dunno if I'll be offered it again. That's why I'm wanting to start ASAP and get it done.

wheelsup · September 30th, 2006, 16:19

Quote:

Originally Posted by jawright

Thanks for the help guys. I want to wait for the cash, except I've been offered this summer job that starts at the end of May and is kind of a big deal. I dunno if I'll be offered it again. That's why I'm wanting to start ASAP and get it done.

Assuming you pay $1200/month towards the loan, you're looking at 3+ months of payments.

Even at a 10% interest rate you're talking somewhere in the nature of $80-$100 max in interest.

Quote:

Loan Balance: $4,000.00
Loan Interest Rate: 10.00%
Loan Term: 0.3 years (4 months)
Minimum Payment: $50.00
Monthly Loan Payment: $1,132.48
Number of Payments: 4
Cumulative Payments: $4,078.07
Total Interest Paid: $78.07

If knocking it out quickly is worth $80, I'd take a loan out

. It sounds like you need to finish ASAP?

That being said, following D-Dawg's advice, why not just save the $$ now. Based on how quickly you are saving can't you accompish your goal of a may time frame while paying in cash ($3,500 on hand now and $3,500 to save)?

jawright · September 30th, 2006, 17:05

Quote:

Originally Posted by wheelsup

That being said, following D-Dawg's advice, why not just save the $$ now. Based on how quickly you are saving can't you accompish your goal of a may time frame while paying in cash ($3,500 on hand now and $3,500 to save)?

I could, but it's mostly just peace of mind knowing I'll have more than enough to complete the rating without any breaks in training (a commercial SE shouldn't cost more than $5K, right??). If I have extra cash left over, I could just give it back to the loan company.

slushie · September 30th, 2006, 23:23

Quote:

Originally Posted by jawright

I could, but it's mostly just peace of mind knowing I'll have more than enough to complete the rating without any breaks in training (a commercial SE shouldn't cost more than $5K, right??). If I have extra cash left over, I could just give it back to the loan company.

I did my commercial with $100 a month sometimes.

September 29th, 2006, 22:29	#1
jawright Senior Member Join Date: Feb 2004 Location: in search of the elusive "BowieGoat." Posts: 423	I suck at financial stuff I've been saving about $1200/mo. toward my commercial, but I really want to start flying soon so I can get it done before May. If I took out a loan, I could pay it back as my paychecks come in. I figure if I pay $3500 out of pocket and then take out a loan for another $3500, that should cover me (my FBO charges $175/hr for dual in a 172RG). How hard is is to pay back a $3500-$4000 loan if you have roughly $600-$1200/mo. to spend on repayment?

September 29th, 2006, 22:37	#3
Captain_Bob Old Skool Join Date: Apr 2003 Location: DFW, based in ONT, wishing I was in Maine Posts: 3,853	Re: I suck at financial stuff ...and... get it done in a 152 or older model (cheaper) 172. Just use the RG for the minimum Complex required. That alone will save you a few grand. Bob __________________ My head is in the clouds and my heart is still in Maine... but my devotion and love belong to my wife and children. Pics!

September 29th, 2006, 22:55	#4
dingo222 Senior Member Join Date: Aug 2004 Location: The 'ville Posts: 465	Re: I suck at financial stuff Disclaimer: I'm no financial planner, loan officer, investment banker, broker, or anything else.....I did stay at a holiday inn express once (thanks crew scheduling) what kind of loan are you taking? If it's an education loan like a stafford, or a key loan, the payments should be low and spread over a longer term. If it's from "uncle Louie" the loan shark, you may need to get it back a bit quicker. I still have like 7G worth of student loans from college through Salie Mae, and I'm paying 81 a month or something like that over 8 more years. A key loan should be about the same. Now here is the deal from my point of view. Pay as much as you can afford up front, to reduce the amount you have to borrow. But, don't pay so much out of pocket that you have none left to live on. Get a good interest rate if possible, and pay down the balance of the loan ASAP. I make 2 payments month on an FO salary, sometimes 3 payments a month. Interest rates fluctuate and have been on the rise recently. It's easy to ride a 10 yr repayment plan, but if you look at a how much you are paying in interest over the term, you'd probably be shocked. By all means, do not default!!!!!!!!!!!!!!!!!!!!!!!!!!!!! If you can't make a payment, call the loan company and tell them! THey are usually flexible if they know what's going on. If they don't, you may default on the loan and you will not borrow any money from anyone for a long time after that! I'd also make sure that you are borrowing money to reach a goal that will produce money in return. If you have a regular job and just want a rating, that's fine. But if you are looking at flying for a job, will the commercial rating get you to a place where you can earn income, or will you also need to borrow for a CFI rating, multi, or whatever. Take all that into account, and the cost of living while you are training. Add 25% to whatever number you come up with just for comfort. If you get the chance, put the loan money in some sort of interest bearing account. Too many people have put all the money on account at the school, only to have the place close its doors. Don't do it in the newest, coolest plane the school offers. Just get it done. Best of luck! __________________ It's ok to cry; this is going to hurt

September 30th, 2006, 01:53	#7
montanapilot Old Skool Join Date: May 2003 Location: Portland, Orygun Posts: 1,638	Re: I suck at financial stuff damn thats theft. $175 an hour will get you a twin with instructor out here.

September 30th, 2006, 01:59	#8
jawright Senior Member Join Date: Feb 2004 Location: in search of the elusive "BowieGoat." Posts: 423	Re: I suck at financial stuff Yeah, but from what I understand, this place uses the $55/hr to actually PAY their instructors.

September 30th, 2006, 03:37	#9
slushie Old Skool Join Date: Dec 2005 Location: Vegas Posts: 1,984	Re: I suck at financial stuff www.bankrate.com go to "calculators" to figure out payments __________________ And she calls from the doorway "Stolen water is sweet, so lets drink it in the darkness if you know what I mean"

September 30th, 2006, 07:59	#10
EDUC8-or Old Skool Join Date: Mar 2001 Location: NC Posts: 2,174	Re: I suck at financial stuff I've been there, as much as I wanted to just get things done I saved as much as I could while hitting the books hard and then rolled into the flying as soon as I had the cash. Also, I would reccomend getting your CFI before the multi commercial. I wasn't sure if that was your plan, but that way you can start instructing and get an employee discount on a twin and then for your CFII and MEI.

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