| Hi Taylor:
Do you have any recommendations for easing the burden of student loan
debt? I'm working steadily and making my payments on time, but I'm
wondering if there's a better approach than losing money every month
for the next 30 years. - Sharon
Hi Sharon: I've helped a lot of people fight through student loan
debt, and there are more options than you might think. In addition
to making regular payments, there are a few other tactics you can
your payments. If you feel comfortable with your finances,
you can always tighten your belt a little more and try to pay
the loans off faster. At first, it will feel like you can't possibly
afford to put more toward debt, but if you try cutting back on
other expenses for a couple of months, there's a good chance those
habits will stick and you'll save loads of money in the long run.
Remember that every dollar you pay above the minimum saves you
interest and reduces the lifespan of that debt. If you make repayment
your primary objective, you'll surprise yourself with how much
you can actually afford each month.
2. Refinance. Imagine paying the same amount each month and
having the total balance go down even faster. That's exactly what
happens if you consolidate your loans with a good refinancing
company. If your interest rate is 4.5% (which isn't all that high),
you might still be able to lower that by a full point. Assuming
you have good credit, any number of student loan consolidation
companies will be happy to assume your debt and give you better
terms than whatever you have at present. If you don't know where
to start, check out Splash Financial. It's a small company that
genuinely works to help people get out from under their debt so
they can move on with their careers. You can also find out what
type of rate you'd get in just a few minutes on the Splash Financial
3. Stay the course. This might not be exactly what you want
to hear, but there's definitely a world in which you should keep
paying the minimum on your loans while shoring up other aspects
of your finances. If you have smaller credit card balances with
higher interest rates, make sure to get that debt off the books.
If you don't have an emergency fund, focus on building that safety
net so you can comfortably pay off your loans without potentially
forcing yourself to take on more debt. While student debt looks
awful on paper, you might benefit from focusing your efforts elsewhere
before trying to pay down the biggest balances.
| Hopefully this
gives you a little direction, Sharon. If you're managing to make payments
and work a job you like, take a moment to recognize that your debt
isn't holding you back too much. Do what you can to improve the situation
and keep enjoying life!
© Taylor Kovar
August 11, 2020
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an offer or solicitation for the sale or purchase of any specific
securities, investments, or investment strategies. Investments involve
risk and, unless otherwise stated, are not guaranteed. Be sure to
first consult with a qualified financial adviser and/or tax professional
before implementing any strategy discussed herein. To submit a question
to be answered in this column, please send it via email to Question@GoFarWithKovar.com,
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