Before you speak, listen. Before you write, think. Before you spend, earn. Before you invest, investigate. Before you criticize, wait. Before you pray, forgive. Before you quit, try. Before you retire, save. Before you die, give.

~William A. Ward

Tuesday, February 12, 2008

Question: I am a currently a college student and would like to know what is the best approach for tackling my student loan debt?


My only concern are my student loans. I predict that I will have incurred a debt of $80,000 after completing my Masters. I live a comfortable yet modest lifestyle and do not want to be bogged down with too much debt. I do not want to have student loan debt for the rest of my life.

I have not began a career yet, so at this point I feel like I can't make much of a contribution, which is probably where most people go wrong. Ideally, I would like to have my student loans paid off shortly after graduating; however, I don't know where to start.

I am interested in learning more about managing the money that I do have and also working on decreasing my student loan debt.


1st – Get a copy of your credit report to verify that student loan debt is all you have – also verify the amount of Student Loan debt you have accumulated thus far. Request a FREE copy of your report from here:

2nd – You have to create a budget to determine how much extra money you have left after expenses. Creating a budget will help you identify where you spend the most money and what categories you can cut back. After you have trimmed your expenses and accounted for every penny we now have feasible amount that can be contribute toward your debt. See other budgeting articles for details on how to create a budget.

3rd – After you have created your budget and determined how much you can start contributing, we can determine a reasonable timeframe for you to be completely out of debt. Starting now is a great ideal and will help you get out of debt quickly.

Many people make the mistake of waiting until after they complete college to start paying off student loan debt since their loans are in deferrment. The power of compounding interest works both ways! Compounding interest can either work in your favor or work against you! If you have $80,000 in loans your required payment based on a 20-year payment schedule and 5% interest rate is approximately $530/mo.

Guess What.......

About $300 of that is interest!!! If you have Subsidized Loans (you are NOT charged for interest during deferrment); therefore, any payments you make while you are in school or during that 6 month period after graduation will be used ENTIRELY to reduce your principal. I can breakdown the numbers even further to show you how beneficial it is to start early; however, I can see your eyes glazing over due to information overload so I will include that in my future post.

The moral of the story is! START EARLY!!!!

If you have any extra money - use it to pay off those loans! Every penny helps and anything you can scratch up can help you on your journey to becoming debt free.

Tax time is here. If you are receiving a refund, this is the perfect opportunity to contribute toward reducing your debt!

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