Last week I programmed my DVR to record “Broke, Busted and Disgusted,” a documentary on the student debt crisis created by Iowa financial speaker Adam Carroll (read more about Adam at adamspeaks.com), which aired Sunday night on CNBC.
I had heard about it at a coffee meeting earlier last week and thought it sounded interesting because I too acknowledge the current national crisis for student debt and our nation’s financial illiteracy is alarming to me.
My girlfriend had also read about the documentary in a recent Business Record Daily piece. She was interested because some of the filming took place at her alma mater, the University of Northern Iowa, and she was curious to see if she knew any familiar faces.
I was surprised to hear she would watch the documentary with me because normally, when I talk about finance her eyes glaze over and she finds any excuse to ignore me–laundry, bathe the dog, clean behind the refrigerator. But she was interested because she currently battles with bearing the weight of loan repayment.
An important thing to note: My girlfriend and I took very different paths in higher education. I attended community college while serving in the Iowa National Guard, eventually transferring into a four-year school, to finance my education. Her undergraduate education was financed by her father and she was debt free until graduate school, which set her back a cool $32,000.
I am currently debt free. She has initiated a three-year plan to knock out her debt, but at times she still feels overwhelmed and anxious about financing this payoff.
We both agreed on a few points:
- College is social and it was an important aspect of and for our lives.
- Not everyone should go to college right away or all at once and that maybe a gap year is a great idea for Americans to consider like the Brits’ Gap year.
- College students spend their money on ridiculous things financed by their student loans. They probably don’t realize that $10 bar tab could cost them as much as $1,000 later on.
- Having the payments you make go to pay off interest before principal will drive you mad (Cheers to the $6.67 in interest my girlfriend incurs every. Single. Day.)
Note: Do you know your daily interest? You should know about this because it may help you remember to take time to pack a lunch instead of eating out or think twice about that second glass of beer at Happy Hour.
At the end of the documentary, she looked at me and said she has calculated interest, payoff debts, etc but she wished she knew of tools that could help break down her own debt the way the documentary demonstrated general breakdowns. Here are three best (free) resources I suggested:
PowerPay Debt Debt Elimination (https://powerpay.org/)
PowerPay is a tool offered by the Utah State University Extension that will help you develop a personalized, self-directed debt elimination plan. It helps you determine how quickly you can become debt free and how much you can save in interest costs by following a debt reduction plan.
This is extremely helpful if you have several different loans and you’re going to attack the debt using a snowball method. Plus, it can act as a roadmap to your debt elimination.
LendEdu (https://lendedu.com/)
LendEdu is a marketplace for student loans, student loan refinancing, credit cards, and personal loans – among other financial products. You are able to do everything online and see what options you may have available to you if you choose to go down this route.
Consolidating and refinancing debt may help you crush your debt sooner however, be sure to seek a professional opinion because the goal is to crush the debt sooner and not prolong it any further. I believe this is an advanced strategy that can be executed efficiently with the right guidance.
Note: I also suggest that you check with your primary bank to see if they have any good deals that they may be running. Mostly, for peace of mind to make sure that you’re getting the best deal.
Sofi (https://www.sofi.com/)
Sofi states that they are a new kind of finance company taking a radical approach to lending and wealth management. They’re all about helping people get ahead and find success. One way they help people get ahead financially is that they offer refinancing of student loans and have a pretty awesome calculator that compares student loans and the respective savings over the course of the loan based on different interest rates and loan terms.
Just going through the calculator exercise can reveal the light at the end of the tunnel.
DinkyTown Financial Calculators (http://www.dinkytown.net/)
Dinkytown.net financial calculators are a great way to start almost any financial analysis. I’ve been using these calculators for years and it’s a great way to get started once you’ve determined the right calculator for your specific situation.
Feeling overwhelmed? Want to increase your payments each month to knock out your debt and take some of the sting off of that monthly payment? Read this recent article, “8 Ways to Earn More Money in Retirement” that quotes myself and seven other financial planners on how to make a little extra coin each month.
We would love to conduct a FREE student loan review for you. Click: Review My Student Loans for FREE to learn more!
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
Anthony Reynolds, CFP®, ChFC®
CoreTegic Capital
Cedar Rapids, IA
anthony@coretegiccapital.com