They had mortgages like that for a while. The interest only or pick a payment loans often wouldn't even cover the interest. Therefore, it gets added to principal. Not a good idea.
FAST Student Loan Payoff
- Thread starter dualthreat
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They had mortgages like that for a while. The interest only or pick a payment loans often wouldn't even cover the interest. Therefore, it gets added to principal. Not a good idea.
That’s what I did. The interest rates are the same at least on mine no matter what your payment plan is. This way you can pay the minimum or throw the extra $300 bucks you have on them without limiting yourself if you have a month that’s tight
I feel bad for you honest folks paying off you criminally inflated student debt.
Follow the money.
Follow the money.
Only if still in school. 6 months after graduation you get interest on them just like a normal loan. That's where the only if in deferment part comes into play.
It actually happened automatically for me. I called Navient (the loan servicer) confused since I never requested it. The lady explained that it is an automatic benefit applied since I went back to grad school. She said you can continue to make payments but you get deferment benefits on top of it. There is also a form you can fill out so it is effective immediately. The automatic deferment didn't kick in until 6 months into classes.
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After reading an article, we started doing this thing where you live on 70% of your take-home pay. 20% goes to debt reduction and the other 10% to long-term savings, whether that be an IRA, brokerage account or whatever. (We both also max the company match on 401k). We are down to just having a small balance on a HELOC from when we finished our basement and we are piling up savings.
Each payday I'd track what was put away for debt and savings in a spreadsheet and keep it in the bank savings account. When bills came due during the month I'd pay the minimum amount. After the first of each month, I'd sweep it all over to any debt and savings to a brokerage account at Vanguard. It's not a perfect system, but it has worked great for us. And living on 70% of our take-home has not impacted our lifestyle at all.
Each payday I'd track what was put away for debt and savings in a spreadsheet and keep it in the bank savings account. When bills came due during the month I'd pay the minimum amount. After the first of each month, I'd sweep it all over to any debt and savings to a brokerage account at Vanguard. It's not a perfect system, but it has worked great for us. And living on 70% of our take-home has not impacted our lifestyle at all.
Are you a homeowner? If so, we took out a Home Equity Line of Credit to pay off our higher interest student loans. The interest rate was much lower on the HELOC than the student loans, and it is much easier for me mentally to just monthly transfer a chunk over to the line of credit within the same bank login than it would have been to pay extra for the student loans since they were already set up to auto pay. May not be for everybody but it was able to get our higher interest loans paid off much quicker and at a lower interest rate.
Unless it is some crazy high interest rate I wouldn't worry about a refi. I personally like the Dave Ramsey snowball model where you pay minimums on everything except the lowest principal one and pay as much as possible on that one and then move on to the next lowest etc. It has worked good for us and takes away a lot of the spinning plates that can happen when you are trying to knock off many at once.
No, I am renting cheap now and have reduced a lot of my expenses. I also listen to a lot of Dave Ramsey as others in this thread. My plan of attack right now is to pay off my entire student debt in 2018 and then start saving for a down payment on a house. I will probably need a newer vehicle along the way, but I will pay cash for a used one.
It sounds like you don't really have any other debt, but I believe student loan interest is still deductible, so that's something to keep in mind.
I was lucky enough not to have much student loan debt (the benefit of graduating right before the huge tuition increases) and I was able to refi at a really low interest rate. So basically, I've been paying $100 a month for the last 15 years. The interest is around $100/year. I haven't been in any rush to pay it off.
I was lucky enough not to have much student loan debt (the benefit of graduating right before the huge tuition increases) and I was able to refi at a really low interest rate. So basically, I've been paying $100 a month for the last 15 years. The interest is around $100/year. I haven't been in any rush to pay it off.
It’s not like student loans are forced upon people. Terms are agreed to, plain and simple. The rates may not be in the borrower’s favor but that’s how life works.
I'm pretty sure most financial planners would advise against such a strategy. It is generally not a good idea to trade secured debt for unsecured debt, even at a better interest rate. The collateral on a HELOC is your primary residence, so if you default on payments guess how they will try to get their money back? If you default on student loans, the penalty can still be harsh but not eviction / foreclosure type of harsh. As someone mentioned previously, there is less teeth to the recovery options.
