Top Things To Consider When Paying Off Student Loans
Are these loans affecting your credit?
Student loans can have a major impact on your overall credit score depending on a few things. How much available credit do you have? How much of this available credit are you utilizing? What is your debt to income ratio? How much money is owed and is how much do you make to cover your debt?
Ways to check the impact of your student loans on your credit.
You can use Equifax or Credit Karma to check your score. You can use the credit simulator tool to see the score in the case that you paid off some debt, refinanced, or increased your available credit.
Increasing your credit limit to increase your score.
By increasing your overall credit limit, that also decreases your credit utilization which increases your score. In the case that you’ve made on-time payments, you can oftentimes contact your credit card providers to ask for a limit increase which will help your score.
The talk about student loans being forgiven.
Public Service Loan Forgiveness (PSLF) is a service that forgives student loans ranging longer than 10 years after 10 years of successful employment. Many politicians have used forgiving student loans as bait to receive electoral votes. While there may be some better student loan forgiveness programs in the future that could possibly wipe out all student debt, it is highly unlikely. Here are some additional relief programs you can look into.
Bankruptcy Discharge (in some rare cases)
Should I Sell My House To Pay Off Student Loans?
If you currently own a home with positive equity you need to evaluate a few things to make the best financial decision.
- How much will you receive when you sell your home?
- How much will be owed to the mortgage company?
- How much of your student loans will you be able to pay off?
- Will you have money left over to move and keep living?
- What’s your interest rate now and will you be able to get the same rate again.
You can start evaluating by getting a cash offer from a local reputable home buyer. Then call your mortgage lender or bank institution and ask for a payoff on your current home. A payoff statement tells the local reputable title company how much will be used to pay off a lender, and how much will be going to the seller. This is also commonly referred to as a HUD.
Once you have the offer and payoff you can then look at any balance that is remaining and calculate a few things.
- How much will you use to pay off student loans?
- How much money will you allocate towards a new place of living (rent or buying)
- How much debt is left after the sale?
Make A Plan To Repay Student Debt
When you make a major financial decision to pay off your student loan debts, you’re contributing positively to our overall economy. The markets go up and down and ultimately crash when individuals don’t pay back the debt. After you’ve calculated everything above you’ll want to make a roadmap to success for paying off student loans.
Find out how much money you will be able to make consistently. If you work on commission take the total YTD (year to date) income and divide by the amount of time you have been at the job. Next, calculate all your expenses and don’t leave anything out. Make sure you budget for all the things you will need to survive, then calculate how much you can pay every pay period to your student loans.
Leverage Yourself And Your Degree To Get A Higher Paying Position.
When you wake up every day, aspire to be the best in your company. There may be limitations to getting a direct promotion immediately, we all understand that. However, you can always put your best foot forward in your work and use your skills to get a higher paid position within the company. You can also talk to other companies about the positions they are offering and let your company know there may be more competitive pay options out there for you.
Know When To Fold.
There have been several companies I have worked for in the past that no matter how clear it was to the employees that I was the fittest for management and promotion, the owners and head bosses never moved me to that position. Eventually, I had to realize I had already reached my full potential with that position and I wasn’t going anywhere. When you’ve reached your ceiling, it’s best to find a new position than won’t stunt your professional growth. After all, you’ve got all those student loans riding on your success.
Know When To Ride It Out.
Sometimes the biggest stress at work comes when sales are bad or the numbers aren’t looking good for the good guys. In these times at your company, it doesn’t always mean your company is bad or never going to work out, it simply means its a harder time than other parts of the year. That’s just sales and business, so don’t get your feelings hurt if it’s not directly your fault. Just ride the wave until the next best season.
There’s many ways to pay off your student debt and everyone tackles it differently. Start looking into the numbers to make a plan for repayment. If you want to sell your home after you know all the options then you can give us a call to get a free evaluation of your homes AS-IS value.