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What is the best strategy for getting out of debt?

In order to get a college education and maybe start my own business, I might have to take out loans. What is the most effective way to pay those debts off in a short amount of time?

#moneymanagement #advice

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Kim’s Answer

Trevor,


I believe the best strategy starts with minimizing how much you take out in loans. This would include evaluating the possibility of starting at a junior college before transferring to a university, preparing your own meals, buying a good used car rather than a new one, working while in school, etc. Assuming you have done all that, and are now at the repayment stage. . .


don't rack up more debt while paying off the loans! However, keep an eye open for the possibility of refinancing the loans for a lower interest rate. Also, write down your budget, so you can track your income and expenses. It's easier to manage your money when you can visualize the situation.


When paying off multiple loans, I start with the one with the highest interest rate. I pay it off first, and then take the money I had paid towards that one, and apply it, along with the regular payment, to paying off the loan with the next highest interest rate, and so on. Alternatively, if you need to feel that you are getting ahead, you could start with the loan that has the lowest balance. Either way, pay more than the minimum due, whenever possible.


Financial discipline does not come easy, especially with all the advertising, and seeing what your friends are buying. However, the earlier you can master it, the more successful you will be!


Best of luck!


Kim



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Lennea’s Answer

Pay your debts off smallest to largest. Once you pay the debt off move the payments to the next bill. This will allow you effectively attack your debt.

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Sarah’s Answer

My advice would be to reduce the amount of debt you take out and make sure you are smart with your money first. My husband and I put him through school on one income, with no debt, in one of the most expensive places to live. Don't get me wrong, it was HARD. We did it though!


Always start with a budget. Sit down and "spend" all of your income before it hits your bank account. This means, you plan where every single dollar will go before you get it. Bills, food, housing, money for savings, money for school. Then stick to it. Use an app to track it (Mint is good). When I say be smart, that means, live within your means and make some hard choices. For example, we don't buy new cars - we save up and buy them with cash. We make our meals, we coupon, and we don't pay for cable. If you stick to a budget, you may be able to save up and pay a good portion of what you need for your business/schooling up front and not have debt at all!


Look at every single option for school, apply for every grant, be the annoying student in the counselors office. There are always options for help! It doesn't hurt to ask or try. School can be expensive and a junior college or smaller college may be more cost effective. Remember to look at all your options.


Good luck! You can totally do this!

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Remigio’s Answer

You have to start with a budget plan. If you are already in serious debt you need to really cut down the unneeded expense such as items that are not needed for survival i.e cable TV.


Note to self your expenses should never be over 50% of your income.

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