WEBVTT - BA Q&A: Should You Wait to Pay Student Loans?

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<v Speaker 1>And now time for the b A Q B keep

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<v Speaker 1>A b A keep I love when we do the

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<v Speaker 1>brann abission question, anansa.

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<v Speaker 2>Yes, and don't forget. We have a fun new segment

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<v Speaker 2>including or a fun new segment on Fridays that we're

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<v Speaker 2>calling BA fan Fridays because Friday was just not complete

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<v Speaker 2>with justice, ba Q and A. We wanted to shout

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<v Speaker 2>out some of our favorite fan mails. So this is

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<v Speaker 2>going to be reviews that y'all have left for us

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<v Speaker 2>on iTunes. So we're going to pluck those out and

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<v Speaker 2>give y'all some love on our socials. So definitely leave

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<v Speaker 2>those reviews on iTunes or wherever you listen to the show,

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<v Speaker 2>and maybe you'll have a special shout out on Friday.

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<v Speaker 1>So first question of BA Fridays Vaqa is from anonymous,

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<v Speaker 1>So we're just gonna call you muss so Mussas. In

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<v Speaker 1>twenty nineteen, I paid off fourteen thousand dollars off my

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<v Speaker 1>student loan debt. COVID happened, and I didn't pay any

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<v Speaker 1>money in twenty twenty and haven't made any payments in

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<v Speaker 1>twenty twenty one. I've just been saving. I have thirteen

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<v Speaker 1>thousand dollars of debt left that I can pay off today.

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<v Speaker 1>Even with paying off the loan, I will still have

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<v Speaker 1>over a year's worth of savings. I'm hesitanting to pay

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<v Speaker 1>off my loans because I was hoping for some student

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<v Speaker 1>loan forgiveness from the Bided administration. I didn't want to

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<v Speaker 1>pay them off and then ten thousand dollars of student

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<v Speaker 1>loan debt be forgiven the next day. But I also

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<v Speaker 1>just want to be debt free and officially done with

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<v Speaker 1>nail net. Would you pay it off now? Would you

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<v Speaker 1>wait until the government made a decision? What should I do? Ooh, muss?

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<v Speaker 1>It is a conundrum.

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<v Speaker 2>Indeed, I can't with that name mus. It's just rhymes

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<v Speaker 2>will puzz And it's just like anyway this is I

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<v Speaker 2>love this question because I feel like a lot of

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<v Speaker 2>folks are in this predicament right now. Like student loan

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<v Speaker 2>you know, payments have been deferred or for you know,

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<v Speaker 2>suspended since the pandemic hit, and it's going to be

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<v Speaker 2>that way through January at least. Biden said that was

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<v Speaker 2>the last extension he was going to give. So the

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<v Speaker 2>ball isn't his court, and he's had this investigation team

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<v Speaker 2>looking into supposedly how he could possibly cancel student loan debt,

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<v Speaker 2>but even if he does, it does seem like he's

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<v Speaker 2>gonna go with just the ten k option. So there

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<v Speaker 2>are folks who are like, I've been saving up money,

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<v Speaker 2>or I have money, what do I do? So Tiff like,

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<v Speaker 2>what's your first reaction to this question?

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<v Speaker 1>My first reaction is, Okay, well, maybe just leave the

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<v Speaker 1>ten thousand because I get it, because I'd be highly

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<v Speaker 1>pissed if you know, he paid it off. And I'm like, oh, so,

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<v Speaker 1>I mean, I'm assuming that your interest rate is not

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<v Speaker 1>too crazy because these are student loans. If you have

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<v Speaker 1>thirteen thousand left to pay off, I don't think he's

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<v Speaker 1>going to forgive more than ten thousand, honestly, So maybe

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<v Speaker 1>I would pay down the three if I was feeling

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<v Speaker 1>some sort of way about it. And I would say,

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<v Speaker 1>if you have all of this and you would still

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<v Speaker 1>have a year's worth of saving saved, one, you might

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<v Speaker 1>be saving too much because at some point, you know,

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<v Speaker 1>it's called the law of diminishing returns, you can actually

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<v Speaker 1>have too much savings, meaning that the money is not

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<v Speaker 1>being put to work. I would consider, also, in the meantime,

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<v Speaker 1>putting some of that money to work in the market,

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<v Speaker 1>you know, investment property somehow like getting that money to grow.

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<v Speaker 2>I absolutely agree. I was going to say, I mean, honestly,

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<v Speaker 2>I don't think you should give your student loans any

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<v Speaker 2>more than you absolutely have to. So when your payment's

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<v Speaker 2>become due, I would just look at your monthly payment

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<v Speaker 2>and just make that payment in full each month and

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<v Speaker 2>then take that money that you've been saving and actually

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<v Speaker 2>start investing it, you know. And that's different for every person,

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<v Speaker 2>and we don't know a ton about you, so it's

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<v Speaker 2>hard to give like specific advice. But it could be

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<v Speaker 2>increasing how much you're contributing to your four one K

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<v Speaker 2>if you're working or if you're not working, your individual

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<v Speaker 2>retirement account your IRA, and think about the benefit of

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<v Speaker 2>just sinking a big chunk of change. Like if Tiffany

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<v Speaker 2>says you have a nice you have a nice emergency fund,

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<v Speaker 2>you don't have other debt. You know, you're feeling financially stable,

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<v Speaker 2>think about making a lump some contribution to an IRA,

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<v Speaker 2>or even maxing it out for the year. I think

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<v Speaker 2>the limit is sixty sixty, five hundred or six thousand

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<v Speaker 2>dollars for twenty It changes every year, so IRS DOT

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<v Speaker 2>go for all your specific questions, but actually funding that

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<v Speaker 2>so that the money can start working for you and

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<v Speaker 2>start growing for you, because you know, like Tiffany said,

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<v Speaker 2>student loan debt, the interest rate is fairly low, especially

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<v Speaker 2>federal student loan debt, and you potentially could stand to

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<v Speaker 2>earn a lot more by investing your money in the market.

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<v Speaker 2>And you know, lump some investing may sound scary, but

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<v Speaker 2>studies show that sometimes it can be more beneficial in

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<v Speaker 2>the long run. You'll earn more in the long run

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<v Speaker 2>if you just kind of sink everything in and one go.

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<v Speaker 2>That's a super aggressive approach. But at the same time,

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<v Speaker 2>like you want to sleep at night, and there's no

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<v Speaker 2>wrong answer here, like paying off your student loan debts

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<v Speaker 2>is an amazing thing, but you have to kind of

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<v Speaker 2>weigh do you want to sleep now and feel like

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<v Speaker 2>you've you've said like f you to neel net or

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<v Speaker 2>would it make you even more upset if you found

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<v Speaker 2>out that you could have got that ten k you

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<v Speaker 2>know forgiven, and which one of those emotions is stronger,

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<v Speaker 2>And then just make the call that you know you

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<v Speaker 2>you want to make that makes you feel not fulfilled,

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<v Speaker 2>but makes you feel stable, It makes you feel like

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<v Speaker 2>you did the right choice with the information that you have.

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<v Speaker 1>You know right now? Okay, we wish you well.

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<v Speaker 2>This listener who says we can call her Brie, says, hello,

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<v Speaker 2>beautiful ladies, I have a question. After graduating college, I

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<v Speaker 2>was super broke and used my Discover and Chase Chase

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<v Speaker 2>credit cards. Both cards have been charged off and sent

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<v Speaker 2>to collections. At this point, I'm not sure what to do.

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<v Speaker 2>Do I reach out to Chase and Discover to try

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<v Speaker 2>to pay it back. Well, paying the charge off card

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<v Speaker 2>increase my credit score? Once paid? Can I have it

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<v Speaker 2>turned back on? Since those two are my oldest credit cards?

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<v Speaker 2>Please help? Sad face emogree.

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<v Speaker 1>This is a really good question. A lot of people

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<v Speaker 1>think like, okay, paying off old cards is going to

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<v Speaker 1>raise their credit score. It won't. It actually is gonna

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<v Speaker 1>bring down your score. Here's the thing about credit scores,

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<v Speaker 1>Credit scores and credit bureaus. They like the new, the now,

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<v Speaker 1>the current. They're like, who is breed today?

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<v Speaker 2>Right?

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<v Speaker 1>So bree today is someone yes that has cards that

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<v Speaker 1>are charged off. But because those cards are charged off,

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<v Speaker 1>it that means there hasn't been really any major action

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<v Speaker 1>on them, I'm assuming in some years, but if you

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<v Speaker 1>start paying on them now you literally bring not only

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<v Speaker 1>the current payments but any pass payments current again, and

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<v Speaker 1>then that becomes who you are now, and therefore your

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<v Speaker 1>score is going to drop. So I don't know how

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<v Speaker 1>long ago. What I would do first and foremost is

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<v Speaker 1>I would get my Googles on. I would say, Hey, Google, gird,

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<v Speaker 1>you're looking cute lose away, Oh you thick thig Okay,

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<v Speaker 1>I would say Google, what is the statute of limitations

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<v Speaker 1>of credit card debts or revolving debt in my state,

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<v Speaker 1>in the state of New Jersey and New York, for example,

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<v Speaker 1>is six years. That means after six years, your debt

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<v Speaker 1>becomes what they call zombie debt. Now, it doesn't mean

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<v Speaker 1>that you don't have that you don't technically owe it,

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<v Speaker 1>like a zombie is not technically dead or alive, So

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<v Speaker 1>it doesn't mean that you don't technically owe it, but

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<v Speaker 1>it does mean that they can't technically come after you

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<v Speaker 1>for it, because the state basically says, hey, you have

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<v Speaker 1>six years to get Brie. If you were in New

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<v Speaker 1>York and New Jersey to get Bree to pay up,

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<v Speaker 1>you're not going to have her at ninety years old

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<v Speaker 1>for debt that she owed when she was twenty No. No,

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<v Speaker 1>So if I would say, if my credit card debts

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<v Speaker 1>were in the zombie debt zone, I would move on

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<v Speaker 1>with my life and put my money toward other debt,

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<v Speaker 1>you know, and paying that off and full and being

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<v Speaker 1>timely to raise my credit score, because paying off super

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<v Speaker 1>old debt, honestly is going to bring down your score.

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<v Speaker 2>Yeah, and if it's six years, you're only one year

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<v Speaker 2>away from that falling off your credit report. So if

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<v Speaker 2>you just hang in there and be patient and start

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<v Speaker 2>building up that good credit behavior, then your score should

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<v Speaker 2>definitely bounce back. I would just add when when it

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<v Speaker 2>comes to zombie debt, it's stopping people from suing you

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<v Speaker 2>for the debt. They can still contact you, and they will,

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<v Speaker 2>and that's where it becomes. It's kind of like poking

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<v Speaker 2>one of those zombies, if you imagine them like walking.

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<v Speaker 2>I hate zombie movies. Let me just not invoke that

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<v Speaker 2>image anyway. But if you poke a zombie and it

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<v Speaker 2>starts to chase you like, they'll try and call you

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<v Speaker 2>to get you to fall for their you know, bait,

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<v Speaker 2>take the bait. And if you even pay a dollar

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<v Speaker 2>on an old debt, that technically has Yeah, it's statue

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<v Speaker 2>limitations has expired, then they can it like restarts the clock,

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<v Speaker 2>and then they can try and sue you again for it.

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<v Speaker 2>So that's why it's important to do what Tiffany said,

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<v Speaker 2>find out the facts for yourself and don't believe anything

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<v Speaker 2>they try to tell you to get you to make

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<v Speaker 2>a payment. If you know for a fact that your

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<v Speaker 2>statue limitations is expired or it's close to expiring, you

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<v Speaker 2>know you can It's it's okay to focus on newer,

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<v Speaker 2>you know, newer financial challenges, debt, saving, investing, things like that,

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<v Speaker 2>and let that old debt expire.

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<v Speaker 1>Exactly, Bree, I'm glad you reach out, Boo boo, so hopefully.

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<v Speaker 2>Actually October if spooky season, we're talking about zombies.

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<v Speaker 1>Exactly, we should have a we should have a Halloween

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<v Speaker 1>Q and a SEGMENTO of scary financial questions.

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<v Speaker 2>They're all terrifying.

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<v Speaker 1>I know.

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<v Speaker 2>I'm still shuddering from from the afromanimalist Christine earlier this

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<v Speaker 2>week when she was telling me I talked to my

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<v Speaker 2>dad about his storage shed from hell that I'm going

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<v Speaker 2>to inherit one day. Oh my god, that's a terrifying, terrifying,

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<v Speaker 2>question that I have to figure out how to answer

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<v Speaker 2>for myself.

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<v Speaker 1>Oh oh, it's hard with family.

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<v Speaker 2>My daddy. You're never going to open that thrift store.

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<v Speaker 2>You're never gonna open there. It's just not happening for you. Yeah, tough. Well,

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<v Speaker 2>then you.

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<v Speaker 1>Have questions, you know, you can always reach out to

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<v Speaker 1>us on the IG. You can reach out to us

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<v Speaker 1>via Brandonbision podcast dot com, BRANDI Vision Podcasts at gmail

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<v Speaker 1>dot com.

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<v Speaker 2>Yes, ma'am, we love to hear from y'all. Send us

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<v Speaker 2>all your questions and don't forget to leave your iTunes

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<v Speaker 2>where have you been? And stay tuned for that.

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<v Speaker 1>Awesome or Amanda until next week. Booboo