Student Loans Often Overstay Their Welcome
Just as many of you, we used student loans. We had about four total. We currently have one left and that makes us VERY happy! We used every last dollar we could squeeze out of our budget, to pay on our debt snowball in March. We were very blessed and were able to pay off $1,325 which actually paid off one completely. (See our updated DEBT FREE progress chart.) I was looking at our current updated balance when I noticed something very amusing. The scheduled pay off date was not until 10/21/18!!!!
10 YEARS to pay off $2,237…I don’t think so!!
Student loans are an enormous drain on one’s ability to build wealth. When listening to people call into The Dave Ramsey Show, it is not uncommon for them to say that the last debt they paid off was Student Loans. I have even heard some argue that they would never pay them off early because of the low interest rates, so that they can “invest” the difference. The idea is that they can use “other people’s money” to invest, but what it really means is that they are not willing to take the time needed to save the money to invest without debt. Patience anyone?
Ummm…you go right ahead, but I think it is A-B-S-U-R-D. It is like NOT paying your mortgage off early so you don’t lose the tax deduction. (You know the one that allows you the privilege of giving the bank MORE of your hard-earned dollars to keep from giving the financial garbage disposal I.R.S. a smaller portion.) Here’s an idea: Pay your Student Loans and your Mortgage off early so you can use ALL of your income, after expenses of course, to build wealth faster than you could ever imagine. Certainly faster than if you had student loan, credit card, car and mortgage payments getting your money first. If you have NO balances due then you have NO interest due either. That’s when you can really invest the difference!!
Debt Is The Storm Cloud That Brings The Flood!
The bottom line is this. DO NOT invest using borrowed money, and DO NOT invest purely for tax savings! Most importantly, get rid of your debt so you can build wealth fast! $600 a month debt payments over a 25 year span, if invested in good Growth Stock Mutual Funds at the market average of just under 12%, would give you just over a million dollars. Is all your debt payments going to give you that kind of return? I don’t think so.
So grab your umbrella, devise a plan, and navigate your way over the soggy, steep mountain of debt. Sunny days are on the other side, and the peace that exists when you aren’t dragging around the heavy and very costly burden that is debt, is glorious! We’re almost over the mountain and out of the rain. It is painful, sometimes intense and very hard, BUT it is worth it. We are about $3,400 away from becoming debt free and we wish you would join us! We refuse to take part in this recession, and you should too!
College Without Debt?
I am starting a four year journey to receive a BS in Finance and I WILL NOT be using debt to fund it. You might say it is impossible, but I say watch me!