1 00:00:00,080 --> 00:00:03,159 Speaker 1: Welcome to How to Money. I'm Joel and I'm Matt, 2 00:00:03,240 --> 00:00:06,920 Speaker 1: and today we're discussing private student loan considerations and pitfalls 3 00:00:07,000 --> 00:00:28,480 Speaker 1: with money Pro Megan Landrus. So last week we had 4 00:00:28,520 --> 00:00:31,400 Speaker 1: money Pro Megan Landrus with us, and she's back with 5 00:00:31,480 --> 00:00:33,720 Speaker 1: us again. But Megan, we didn't ask you any questions. 6 00:00:34,120 --> 00:00:35,919 Speaker 1: You see, she's the first return guest, by the way 7 00:00:35,960 --> 00:00:38,400 Speaker 1: to the show. We've never done this before. We're making 8 00:00:38,680 --> 00:00:41,760 Speaker 1: an exception because Megan is so great and so helpful, 9 00:00:42,040 --> 00:00:44,000 Speaker 1: and you know what, student loans suck so bad that 10 00:00:44,040 --> 00:00:45,960 Speaker 1: people need that much help with it. There's a hashtag 11 00:00:46,000 --> 00:00:50,800 Speaker 1: for student loans suck there. All right, let's proliferate that 12 00:00:51,159 --> 00:00:54,240 Speaker 1: like mad. We'll do it. Megan, so real quick. Have 13 00:00:54,400 --> 00:00:56,080 Speaker 1: you ever had any student loans? We've you know, we 14 00:00:56,160 --> 00:00:59,360 Speaker 1: spent the entire last episode talking about student loans. Is 15 00:00:59,360 --> 00:01:02,560 Speaker 1: this something that you have personal experience with? No? Actually 16 00:01:02,640 --> 00:01:04,600 Speaker 1: I don't. And that's why a lot of my friends 17 00:01:04,600 --> 00:01:07,280 Speaker 1: and my family don't really understand why I'm so crazy 18 00:01:07,280 --> 00:01:09,920 Speaker 1: about student loans or I'm so interested in them. I 19 00:01:09,959 --> 00:01:13,320 Speaker 1: went to Kennesaw State University, so born and raised in Georgia, 20 00:01:13,400 --> 00:01:16,520 Speaker 1: never left went to Kinnesaw state. At the time I went, 21 00:01:16,640 --> 00:01:19,120 Speaker 1: it was a very affordable option for me. I had 22 00:01:19,200 --> 00:01:22,240 Speaker 1: the Hope Scholarship which helped with tuition, and I worked 23 00:01:22,240 --> 00:01:25,080 Speaker 1: full time, so I did pay for my my housing 24 00:01:25,160 --> 00:01:28,560 Speaker 1: up there and my expenses. So I did not graduate 25 00:01:28,600 --> 00:01:32,280 Speaker 1: with student loans fortunately. But like on the last episode 26 00:01:32,360 --> 00:01:34,560 Speaker 1: I mentioned, I work with a lot of folks who 27 00:01:34,600 --> 00:01:38,360 Speaker 1: have student loan debt in the mix that really affects 28 00:01:38,400 --> 00:01:41,720 Speaker 1: their financial plan and delays a lot of decisions or 29 00:01:41,800 --> 00:01:44,480 Speaker 1: savings goals or just financial goals that they have in 30 00:01:44,520 --> 00:01:47,800 Speaker 1: the mix. So I'm really passionate about helping people navigate 31 00:01:47,840 --> 00:01:51,800 Speaker 1: their repayment strategy to get them on a faster track 32 00:01:51,880 --> 00:01:55,160 Speaker 1: to achieving their financial independence. Yeah, that's great. I feel 33 00:01:55,160 --> 00:01:57,600 Speaker 1: like you are probably like the younger female version of 34 00:01:57,640 --> 00:01:59,800 Speaker 1: myself because I went to Kinnessaw State as well at 35 00:01:59,840 --> 00:02:02,360 Speaker 1: the scholarship. Actually, my first two years I went to 36 00:02:02,520 --> 00:02:05,000 Speaker 1: a private college out of state, and I racked up 37 00:02:05,040 --> 00:02:08,560 Speaker 1: some student loan debt there and decided, based on the 38 00:02:08,560 --> 00:02:10,960 Speaker 1: fact that I didn't want to accrue anymore and I 39 00:02:11,000 --> 00:02:13,239 Speaker 1: wanted to graduate with a reasonable amount that I could 40 00:02:13,240 --> 00:02:15,560 Speaker 1: pay off in a shorter amount of time, I said, Okay, 41 00:02:15,560 --> 00:02:17,359 Speaker 1: I'm going back in state, like, why did I leave 42 00:02:17,520 --> 00:02:19,639 Speaker 1: in the first place. I mean, I was glad I did. 43 00:02:19,680 --> 00:02:21,840 Speaker 1: I felt like the first two years that private school 44 00:02:22,120 --> 00:02:24,359 Speaker 1: were formative years for me. I learned a lot and 45 00:02:24,360 --> 00:02:27,360 Speaker 1: made some important relationships. I wouldn't go back and do 46 00:02:27,400 --> 00:02:30,760 Speaker 1: it over. But I'm also glad that I left and 47 00:02:30,880 --> 00:02:34,800 Speaker 1: I capped the amount that I borrowed because uh, some states, 48 00:02:34,840 --> 00:02:39,880 Speaker 1: like Georgia Tennessee has a free college program for community 49 00:02:39,880 --> 00:02:42,200 Speaker 1: colleges for people in their state. There are a lot 50 00:02:42,200 --> 00:02:45,160 Speaker 1: more state based programs happening now to um incentivize people 51 00:02:45,240 --> 00:02:47,840 Speaker 1: to stay in state at colleges and whether it's community 52 00:02:47,880 --> 00:02:51,320 Speaker 1: colleges or public colleges in that state. UM, I'm a 53 00:02:51,400 --> 00:02:53,720 Speaker 1: big fan of that, and I think, uh, the federal 54 00:02:53,760 --> 00:02:55,880 Speaker 1: government has not been able to to make anything happen 55 00:02:55,919 --> 00:02:57,880 Speaker 1: when it comes to free college for all. And I 56 00:02:57,880 --> 00:02:59,520 Speaker 1: don't know if that's good or bad, depends on your 57 00:02:59,560 --> 00:03:01,840 Speaker 1: political meaning, but I'm super glad that a lot of 58 00:03:01,840 --> 00:03:04,079 Speaker 1: states are kind of taking that under their wing. And 59 00:03:04,280 --> 00:03:06,680 Speaker 1: man moving back into the state of Georgia, you megan 60 00:03:06,720 --> 00:03:09,400 Speaker 1: graduated with no student loans. I graduated with not nearly 61 00:03:09,400 --> 00:03:11,560 Speaker 1: as much as I could have because of that, and 62 00:03:11,560 --> 00:03:13,560 Speaker 1: I gotta say I'm super thankful for that. Yeah, you 63 00:03:13,600 --> 00:03:16,040 Speaker 1: mentioned Hope scholarship. Guys, that's something I was able to 64 00:03:16,040 --> 00:03:19,760 Speaker 1: take advantage of as well, just barely. I almost lost 65 00:03:19,800 --> 00:03:22,800 Speaker 1: it several times. But having that as an option for 66 00:03:22,840 --> 00:03:25,639 Speaker 1: me was was incredible. So very lucky to have had 67 00:03:25,639 --> 00:03:27,760 Speaker 1: that as an option. But you know, as a bigger question, 68 00:03:27,800 --> 00:03:30,359 Speaker 1: like the fact that student loans exist, we talk about 69 00:03:30,400 --> 00:03:32,520 Speaker 1: it like it's this terrible thing and it can be 70 00:03:32,720 --> 00:03:35,560 Speaker 1: right the way that they're given out and there's very 71 00:03:35,600 --> 00:03:40,720 Speaker 1: little information being disseminated and taught to new borrowers. However, 72 00:03:40,760 --> 00:03:43,640 Speaker 1: being informed and finding a way to manage those student loans, 73 00:03:43,840 --> 00:03:46,360 Speaker 1: that is a completely different story. That's a completely different 74 00:03:46,360 --> 00:03:49,360 Speaker 1: task and something that involves two full episodes of talking 75 00:03:49,400 --> 00:03:52,840 Speaker 1: about in order to try to unpack. So we're excited 76 00:03:52,880 --> 00:03:55,000 Speaker 1: to have Megan back on this week. But before we 77 00:03:55,040 --> 00:03:56,760 Speaker 1: dive into the topic, let's go ahead and talk about 78 00:03:56,760 --> 00:03:59,480 Speaker 1: the beer. Let's do it, Matt. So, my buddy Jeff 79 00:03:59,640 --> 00:04:02,080 Speaker 1: at my local package store, he actually just gave me 80 00:04:02,120 --> 00:04:05,080 Speaker 1: this beer, which was super sweet. Yeah, So Jeff the man, 81 00:04:05,200 --> 00:04:07,840 Speaker 1: he's a good friend, and we text that's how good. 82 00:04:07,880 --> 00:04:10,120 Speaker 1: That's a good friends we are. That's how well. I 83 00:04:10,160 --> 00:04:12,440 Speaker 1: know the beer guy at my local beer story and 84 00:04:12,480 --> 00:04:15,960 Speaker 1: he's like a beer Somali. Yes, yes he is. And 85 00:04:16,000 --> 00:04:20,040 Speaker 1: so he had this bottle sitting in the back storage room. 86 00:04:20,120 --> 00:04:22,360 Speaker 1: And this is a five year old beer. It's by 87 00:04:22,400 --> 00:04:25,040 Speaker 1: Westbrook Brewing Company out of South Carolina. They're just right 88 00:04:25,040 --> 00:04:28,599 Speaker 1: outside of Charleston. And this is a red wine barrel 89 00:04:28,640 --> 00:04:32,480 Speaker 1: aged Belgian style quad. This was aged for three years 90 00:04:32,680 --> 00:04:35,560 Speaker 1: in red wine barrels. Yeah, so super cool. We'll give 91 00:04:35,720 --> 00:04:37,760 Speaker 1: our thoughts. All three of us are drinking this beer, 92 00:04:37,760 --> 00:04:39,240 Speaker 1: will give of our thoughts at the end of the show. 93 00:04:39,400 --> 00:04:41,800 Speaker 1: And by the way, if you didn't catch last week's episode, 94 00:04:42,040 --> 00:04:44,320 Speaker 1: that's where Megan showed up with a beer. So mean right, 95 00:04:44,320 --> 00:04:45,840 Speaker 1: I'm glad we can return the favor and you can 96 00:04:45,920 --> 00:04:49,560 Speaker 1: enjoy with our beers. Yeah, definitely, this is up my alley. Awesome. 97 00:04:49,920 --> 00:04:52,400 Speaker 1: We did something different with our money pro show. And 98 00:04:52,480 --> 00:04:55,799 Speaker 1: normally we have a friend of ours submit five minutes 99 00:04:55,839 --> 00:04:58,520 Speaker 1: of distilled wisdom about one topic. But Matt and I 100 00:04:58,560 --> 00:05:01,719 Speaker 1: decided that the topic of student loans, well, not only 101 00:05:01,920 --> 00:05:05,240 Speaker 1: is it big enough that we couldn't consolidate it to 102 00:05:05,360 --> 00:05:07,480 Speaker 1: five minutes, but we needed a whole show. We actually 103 00:05:07,480 --> 00:05:10,040 Speaker 1: needed two whole shows with an expert. And we also 104 00:05:10,080 --> 00:05:13,240 Speaker 1: wanted to answer your listener questions, and so we took 105 00:05:13,279 --> 00:05:15,960 Speaker 1: those on our Facebook page. You can find that if 106 00:05:16,000 --> 00:05:17,640 Speaker 1: you at a Facebook dot com and you type in 107 00:05:17,760 --> 00:05:20,040 Speaker 1: how to money in the search bar, you can find 108 00:05:20,040 --> 00:05:22,520 Speaker 1: our group. And that group is an awesome place to 109 00:05:22,560 --> 00:05:26,080 Speaker 1: ask questions, to to solicit advice, and where everyone kind 110 00:05:26,080 --> 00:05:28,400 Speaker 1: of helps each other out. And so we said, you 111 00:05:28,400 --> 00:05:31,440 Speaker 1: know what, let's answer a bunch of listener questions because 112 00:05:31,480 --> 00:05:33,320 Speaker 1: everyone's situation is a little different and it kind of 113 00:05:33,360 --> 00:05:36,400 Speaker 1: helps us understand and answering those specific questions kind of 114 00:05:36,400 --> 00:05:39,359 Speaker 1: helps us understand a little bit better the specifics of 115 00:05:39,360 --> 00:05:41,200 Speaker 1: how student loans work, because there are a lot of 116 00:05:41,240 --> 00:05:44,600 Speaker 1: specifics and it's hard to summarize succinctly. And today we 117 00:05:44,640 --> 00:05:49,240 Speaker 1: wanted to cover the considerations and potential pitfalls of private 118 00:05:49,240 --> 00:05:52,320 Speaker 1: student loans and if you should consider refinancing or not. 119 00:05:52,600 --> 00:05:54,560 Speaker 1: And so let's kind of give some rule of thumbs. Megan, 120 00:05:54,560 --> 00:05:56,680 Speaker 1: you've kind of want to start us off in how 121 00:05:56,720 --> 00:05:59,760 Speaker 1: people should think about private loans. Well, first and foremost, 122 00:05:59,800 --> 00:06:02,800 Speaker 1: with the private student loan debt, we're looking at two 123 00:06:02,839 --> 00:06:05,920 Speaker 1: different entities. Private student loan debt and federal debt are 124 00:06:06,080 --> 00:06:09,360 Speaker 1: very different things. We need to understand that I always, 125 00:06:09,400 --> 00:06:12,920 Speaker 1: always always recommend looking outside just the interest rate when 126 00:06:12,960 --> 00:06:17,280 Speaker 1: you're considering private refinancing. When you consolidate your loans from 127 00:06:17,279 --> 00:06:20,200 Speaker 1: federal to private, you lose a lot of federal benefits, 128 00:06:20,279 --> 00:06:22,840 Speaker 1: some of those being you lose a lot of flexibility 129 00:06:22,960 --> 00:06:25,640 Speaker 1: in terms that come with the FED loans, and you 130 00:06:25,720 --> 00:06:28,279 Speaker 1: lose some of the interest subsidies or discounts that come 131 00:06:28,279 --> 00:06:32,400 Speaker 1: with FED loans. Also those really attractive super low interest 132 00:06:32,480 --> 00:06:34,680 Speaker 1: rates that may be reeling you in, like that two 133 00:06:34,720 --> 00:06:37,520 Speaker 1: percent or three percent offer. You have to have stellar 134 00:06:37,560 --> 00:06:41,039 Speaker 1: credit to get approved for those. So last year the 135 00:06:41,080 --> 00:06:44,680 Speaker 1: average credit score or the average FICO score to even 136 00:06:44,680 --> 00:06:48,400 Speaker 1: be approved for a private refinance was seven sixty four. 137 00:06:48,720 --> 00:06:50,520 Speaker 1: So if you don't have a credit score in that range, 138 00:06:50,560 --> 00:06:54,000 Speaker 1: you may get declined altogether. All right, Megan, So real quick. 139 00:06:54,040 --> 00:06:57,120 Speaker 1: You mentioned the interest subsidies and the discounts, so those 140 00:06:57,120 --> 00:06:59,400 Speaker 1: are specific to federal loans, But what is what does 141 00:06:59,440 --> 00:07:02,159 Speaker 1: that actually mean and what protections are you losing when 142 00:07:02,160 --> 00:07:04,560 Speaker 1: you refinance to a private loan? Right, So, on the 143 00:07:04,560 --> 00:07:08,440 Speaker 1: federal side, UH subsidies or discounts to your interests or 144 00:07:08,480 --> 00:07:12,360 Speaker 1: your accumulated interest. Depending on your repayment plan, your interest 145 00:07:12,440 --> 00:07:15,960 Speaker 1: is discounted or cut in half or waived for certain 146 00:07:16,000 --> 00:07:18,840 Speaker 1: periods of time. That is not a benefit on the 147 00:07:18,880 --> 00:07:22,080 Speaker 1: private side. On the private side, your interests continues to 148 00:07:22,120 --> 00:07:25,680 Speaker 1: accumulate on the principle, and if you have unpaid interest, 149 00:07:26,200 --> 00:07:28,800 Speaker 1: that unpaid interest is added to the principle and then 150 00:07:28,840 --> 00:07:31,800 Speaker 1: your interest is then charged off of that new principal balance. 151 00:07:32,080 --> 00:07:35,120 Speaker 1: So your balance, if you refinance into a private student loan, 152 00:07:35,320 --> 00:07:37,520 Speaker 1: it's just going to grow more quickly because of that 153 00:07:37,560 --> 00:07:40,640 Speaker 1: compounding effect, right right, it can, especially if you're just 154 00:07:40,720 --> 00:07:43,720 Speaker 1: paying the minimum. So when it comes to interest rates, 155 00:07:43,880 --> 00:07:46,600 Speaker 1: I feel like people get interested in private student loans 156 00:07:46,640 --> 00:07:49,560 Speaker 1: because there are some really slick websites offering some really 157 00:07:49,560 --> 00:07:53,560 Speaker 1: attractive looking interest rates. And so if you're paying seven 158 00:07:53,600 --> 00:07:57,720 Speaker 1: percent on your federal student loans and you go to 159 00:07:57,840 --> 00:08:01,360 Speaker 1: one of those private student loan website that offers rates 160 00:08:01,360 --> 00:08:04,360 Speaker 1: into three percent range, that looks really good. But can 161 00:08:04,360 --> 00:08:06,080 Speaker 1: you tell us why that might not always be the 162 00:08:06,120 --> 00:08:09,000 Speaker 1: best choice for someone with a higher interest payment. Yeah, 163 00:08:09,040 --> 00:08:12,400 Speaker 1: So going back to your FICO score again, it's really 164 00:08:12,440 --> 00:08:15,320 Speaker 1: hard to qualify for those really low interest rates that 165 00:08:15,320 --> 00:08:19,000 Speaker 1: they advertise, and that is what they advertise the lowest available, 166 00:08:19,440 --> 00:08:21,400 Speaker 1: So keep that in mind. The other thing to keep 167 00:08:21,440 --> 00:08:24,720 Speaker 1: in mind is the flexibility in terms if you're if 168 00:08:24,720 --> 00:08:28,560 Speaker 1: you're switching from federal loans to private loans, you lose 169 00:08:28,600 --> 00:08:31,760 Speaker 1: the option to have income based payments on the private side. 170 00:08:31,960 --> 00:08:34,160 Speaker 1: That is not an option. You pay what they tell 171 00:08:34,240 --> 00:08:36,960 Speaker 1: you to pay. If you lose your job, They're not 172 00:08:37,120 --> 00:08:39,800 Speaker 1: very flexible on if you can't afford the payments anymore, 173 00:08:40,000 --> 00:08:43,640 Speaker 1: and that's going to continue to affect your credit and 174 00:08:43,679 --> 00:08:47,720 Speaker 1: balloon your balance. You can't reverse once you've gone private, 175 00:08:47,880 --> 00:08:50,280 Speaker 1: you can't go back to federal. So if you if 176 00:08:50,320 --> 00:08:55,120 Speaker 1: you consolidate, do a a private refinance and you decide, 177 00:08:55,200 --> 00:08:57,559 Speaker 1: oh crap, I really like the federal system. I want 178 00:08:57,559 --> 00:08:59,960 Speaker 1: to hop back on an income based payment, you can't 179 00:09:00,040 --> 00:09:02,680 Speaker 1: reverse what you did. So that's something you need to 180 00:09:02,720 --> 00:09:04,960 Speaker 1: keep in mind as well. All right, Megan, I feel 181 00:09:04,960 --> 00:09:08,199 Speaker 1: like that brings up the question of who do private 182 00:09:08,240 --> 00:09:11,040 Speaker 1: student loans actually make sense for? And so when does 183 00:09:11,080 --> 00:09:15,120 Speaker 1: it make sense for someone currently repaying their loans on 184 00:09:15,160 --> 00:09:17,240 Speaker 1: a federal student loan repayment plan? When does it make 185 00:09:17,280 --> 00:09:20,680 Speaker 1: sense for them to actually potentially refy. So I think 186 00:09:20,720 --> 00:09:23,280 Speaker 1: it makes sense when you have a very low balance. 187 00:09:23,480 --> 00:09:26,000 Speaker 1: And I keep talking about these balanced rules of them, 188 00:09:26,200 --> 00:09:30,080 Speaker 1: but my opinion is your balance should be very low 189 00:09:30,240 --> 00:09:33,640 Speaker 1: compared to your income, usually manageable. Yes, do you even 190 00:09:33,640 --> 00:09:37,160 Speaker 1: consider a refinance because of all of those benefits that 191 00:09:37,240 --> 00:09:42,640 Speaker 1: you're losing, But there is value in finding a vehicle 192 00:09:42,760 --> 00:09:45,920 Speaker 1: that has a lower interest rate if you're starting to 193 00:09:45,920 --> 00:09:49,720 Speaker 1: tackle your debt faster. So, for example, if your federal 194 00:09:49,760 --> 00:09:53,520 Speaker 1: student loans are at a six point eight percent interest 195 00:09:53,600 --> 00:09:57,000 Speaker 1: rate and you're down to a balance of let's say 196 00:09:57,080 --> 00:10:00,360 Speaker 1: eight thousand, and you think you can manageably start to 197 00:10:00,440 --> 00:10:03,160 Speaker 1: really tackle and pay down that balance to get it 198 00:10:03,200 --> 00:10:05,880 Speaker 1: out of the mix sooner rather than later. If you 199 00:10:05,920 --> 00:10:08,160 Speaker 1: have stellar credit and you can you can test this. 200 00:10:08,280 --> 00:10:11,400 Speaker 1: You can softly apply with some of the refinance companies 201 00:10:11,440 --> 00:10:14,319 Speaker 1: out there see if you do qualify for a really 202 00:10:14,400 --> 00:10:16,720 Speaker 1: low interest rate, If you qualify for a two or 203 00:10:16,720 --> 00:10:19,600 Speaker 1: three percent interest rate, that's when it could make sense 204 00:10:19,760 --> 00:10:22,080 Speaker 1: when you have a very low balance, you're willing to 205 00:10:22,120 --> 00:10:25,480 Speaker 1: walk away from the flexibility of those federal loans and 206 00:10:25,920 --> 00:10:28,719 Speaker 1: you get approved for that lower interest rate. That I 207 00:10:28,760 --> 00:10:30,760 Speaker 1: think that's when it can make sense. Cool, and you 208 00:10:30,760 --> 00:10:34,040 Speaker 1: mentioned softly apply, Like, what exactly does that mean? So 209 00:10:34,200 --> 00:10:37,000 Speaker 1: you can softly apply through I mean, there's a lot 210 00:10:37,040 --> 00:10:40,960 Speaker 1: of private refinancing brokers out there that will shop the 211 00:10:41,040 --> 00:10:44,320 Speaker 1: rate out for you. Credible is one, there's a few 212 00:10:44,320 --> 00:10:47,839 Speaker 1: others out there. But basically, you type in your basic information, 213 00:10:48,000 --> 00:10:51,120 Speaker 1: how much your your student loan balance is, what your 214 00:10:51,160 --> 00:10:55,080 Speaker 1: annual income is, and your basic information, and they do 215 00:10:55,160 --> 00:10:58,000 Speaker 1: a soft check on your credit, but it will tell 216 00:10:58,040 --> 00:11:00,600 Speaker 1: you whether or not you're going to be approved one 217 00:11:01,120 --> 00:11:04,160 Speaker 1: and if so, what you could expect your interest rate 218 00:11:04,240 --> 00:11:06,240 Speaker 1: to look like. So that can be kind of a 219 00:11:07,240 --> 00:11:11,000 Speaker 1: either a deterrent or something that drives you to actually 220 00:11:11,040 --> 00:11:14,720 Speaker 1: execute that into refinancing. Yeah, and so if you're able 221 00:11:14,760 --> 00:11:17,679 Speaker 1: to get into an interest rate that is sufficiently lower 222 00:11:17,720 --> 00:11:20,600 Speaker 1: than the one that you currently have, it could make sense. 223 00:11:20,720 --> 00:11:22,440 Speaker 1: Like Megan said, if you have a super low balance, 224 00:11:22,840 --> 00:11:25,360 Speaker 1: if you're barely moving the needle, if you're going from 225 00:11:25,600 --> 00:11:28,880 Speaker 1: six and a half percent to six percent, it probably 226 00:11:28,960 --> 00:11:31,280 Speaker 1: isn't worth first off, the hassle, but then second off 227 00:11:31,520 --> 00:11:33,600 Speaker 1: the fact that you are losing some of those if 228 00:11:33,600 --> 00:11:36,200 Speaker 1: you do run to a hardship not to have those 229 00:11:36,320 --> 00:11:39,079 Speaker 1: benefits of being in a federal student loan. I mean 230 00:11:39,120 --> 00:11:41,040 Speaker 1: that just stinks, and so you don't want to refi 231 00:11:41,160 --> 00:11:43,240 Speaker 1: out of that if you're barely moving the needle when 232 00:11:43,280 --> 00:11:44,840 Speaker 1: it comes to interest rates. So I think that's like 233 00:11:44,880 --> 00:11:46,679 Speaker 1: a really good rule of thumb. And then so we're 234 00:11:46,679 --> 00:11:49,080 Speaker 1: talking about interest rates, I want to talk to about 235 00:11:49,360 --> 00:11:52,439 Speaker 1: time frames or terms, and so we're talking about refinancing 236 00:11:52,480 --> 00:11:55,600 Speaker 1: down to, you know, a rate that's significantly lower. Do 237 00:11:55,600 --> 00:11:58,600 Speaker 1: you at all recommend for folks to consider the length 238 00:11:58,640 --> 00:12:00,880 Speaker 1: of time that they would be able to actually pay 239 00:12:00,920 --> 00:12:03,480 Speaker 1: down that debt if they're going to refinance to a 240 00:12:03,520 --> 00:12:06,400 Speaker 1: private loan. Do you want your clients to be out 241 00:12:06,480 --> 00:12:09,240 Speaker 1: of debt within a year? Uh, two years, three years? Like, 242 00:12:09,320 --> 00:12:11,360 Speaker 1: is there a period of time that, yeah, that you 243 00:12:11,360 --> 00:12:13,800 Speaker 1: want to see folks out of it completely? Yeah? So 244 00:12:13,840 --> 00:12:16,240 Speaker 1: I think it comes back down to the goals in 245 00:12:16,280 --> 00:12:18,559 Speaker 1: your plan. If you have if you if you've got 246 00:12:18,559 --> 00:12:20,600 Speaker 1: to prove for a super low interest rate, let's say 247 00:12:20,600 --> 00:12:23,200 Speaker 1: you've got three point five uh, and you're able to 248 00:12:23,240 --> 00:12:26,199 Speaker 1: refinance your student loans into that three point five interest rate? 249 00:12:26,600 --> 00:12:29,559 Speaker 1: Are there other areas in your financial plan that need 250 00:12:29,679 --> 00:12:32,520 Speaker 1: beefing up? Do you have other higher interest debt that 251 00:12:32,600 --> 00:12:35,400 Speaker 1: maybe you can start to prioritize and accelerate. Now with 252 00:12:35,440 --> 00:12:37,400 Speaker 1: that extra money that you have in your cash flow, 253 00:12:37,760 --> 00:12:40,920 Speaker 1: are there extra savings goals or investing goals that maybe 254 00:12:40,920 --> 00:12:43,800 Speaker 1: you should prioritize because you're only being charged three point 255 00:12:43,840 --> 00:12:47,120 Speaker 1: five now, so maybe we can beat that in the market, 256 00:12:47,280 --> 00:12:50,360 Speaker 1: or maybe we can finally get that emergency savings account 257 00:12:50,600 --> 00:12:52,920 Speaker 1: up and going. So it comes down to the goals 258 00:12:52,960 --> 00:12:56,760 Speaker 1: of priorities there so not not necessarily a term I'd 259 00:12:56,800 --> 00:13:00,480 Speaker 1: recommend it. It just needs to fit within the plan. Yeah, 260 00:13:00,480 --> 00:13:02,120 Speaker 1: I love that, But it's also kind of what makes 261 00:13:02,160 --> 00:13:05,280 Speaker 1: it so tough, right as an individual with personal you know, 262 00:13:05,320 --> 00:13:07,480 Speaker 1: financial goals, like what it is that you're trying to 263 00:13:07,520 --> 00:13:10,080 Speaker 1: achieve because there is no clear answer, Like it's not 264 00:13:10,120 --> 00:13:11,880 Speaker 1: like you can say, Okay, if it's gonna be less 265 00:13:11,880 --> 00:13:13,520 Speaker 1: than twelve months and I'll be able to knock this out, 266 00:13:13,520 --> 00:13:15,280 Speaker 1: sure let's go for it. But like you said, in 267 00:13:15,360 --> 00:13:17,640 Speaker 1: some instances, you might want to actually stretch that out 268 00:13:17,679 --> 00:13:20,719 Speaker 1: because there's other opportunities, there's other things that you want 269 00:13:20,720 --> 00:13:24,160 Speaker 1: to achieve from a financial standpoint. Having your student loans, 270 00:13:24,200 --> 00:13:26,000 Speaker 1: they're keeping you from that and you know, like as 271 00:13:26,040 --> 00:13:27,800 Speaker 1: sort of a blanket statement may not be the way 272 00:13:27,840 --> 00:13:30,280 Speaker 1: to approach paying off your student loans, right. I feel 273 00:13:30,320 --> 00:13:33,120 Speaker 1: like there is no blanket statement. It really just comes 274 00:13:33,120 --> 00:13:36,120 Speaker 1: down to your priorities, what's keeping you up at night 275 00:13:36,160 --> 00:13:39,400 Speaker 1: financially speaking, and where you're trying to get ahead in 276 00:13:39,400 --> 00:13:42,400 Speaker 1: your financial situation. Yeah. I think the biggest thing though, 277 00:13:42,400 --> 00:13:44,240 Speaker 1: when it comes to private student loans that we just 278 00:13:44,280 --> 00:13:47,400 Speaker 1: have to reiterate is that private student loans are not 279 00:13:47,480 --> 00:13:50,240 Speaker 1: nearly as forgiving as federal loans, And like Megan said, 280 00:13:50,440 --> 00:13:52,480 Speaker 1: you can't go back, you know, once you've actually pulled 281 00:13:52,520 --> 00:13:54,920 Speaker 1: the trigger and you've done the refinance, and so you're 282 00:13:54,920 --> 00:13:59,199 Speaker 1: gonna want to make sure that before you actually refinance 283 00:13:59,240 --> 00:14:02,280 Speaker 1: into a of a student loan that the terms are 284 00:14:02,480 --> 00:14:05,280 Speaker 1: much much more favorable and that you feel like you 285 00:14:05,320 --> 00:14:08,640 Speaker 1: have the financial breathing room to take on an increase payment, 286 00:14:09,040 --> 00:14:11,200 Speaker 1: that you can afford that in your budget, and that 287 00:14:11,280 --> 00:14:13,800 Speaker 1: you will be able to for the life of that 288 00:14:13,880 --> 00:14:16,920 Speaker 1: private student loan, however long of a term you take on, 289 00:14:17,160 --> 00:14:19,560 Speaker 1: because you're gonna miss out on some of those benefits 290 00:14:19,960 --> 00:14:22,720 Speaker 1: of having a federal student loan if times get tough 291 00:14:22,920 --> 00:14:25,920 Speaker 1: and you don't have enough money to meet that obligation, 292 00:14:26,080 --> 00:14:28,920 Speaker 1: so make sure you consider that before you do a 293 00:14:28,960 --> 00:14:32,480 Speaker 1: private student loan refinance. They can be good, like Megan said, 294 00:14:32,480 --> 00:14:34,200 Speaker 1: if you can get one of those sweet three percent rates, 295 00:14:34,200 --> 00:14:36,480 Speaker 1: if you've got a great, great credit score, but if 296 00:14:36,520 --> 00:14:39,560 Speaker 1: you don't, if you aren't one of those people, be very, 297 00:14:39,640 --> 00:14:42,160 Speaker 1: very careful before you make that decision. So the rest 298 00:14:42,200 --> 00:14:44,280 Speaker 1: of this episode, we're planning to get to a lot 299 00:14:44,320 --> 00:14:46,440 Speaker 1: of listener questions that are posted in our Facebook group. 300 00:14:46,560 --> 00:14:49,360 Speaker 1: We're gonna cover some of the companies to refinance your 301 00:14:49,360 --> 00:14:52,000 Speaker 1: student loans with, as well as a lot of other 302 00:14:52,080 --> 00:15:04,160 Speaker 1: questions right after the break. All right, Matt, Megan, we're back. 303 00:15:04,280 --> 00:15:06,960 Speaker 1: Let's get right into this. Let's talk about the best 304 00:15:07,120 --> 00:15:10,120 Speaker 1: lenders where you should consider going if you are one 305 00:15:10,120 --> 00:15:12,200 Speaker 1: of those people, Megan that you mentioned would be a 306 00:15:12,240 --> 00:15:15,520 Speaker 1: good candidate for refinancing your student loan into a private 307 00:15:15,560 --> 00:15:18,600 Speaker 1: student loan. Where should people actually start If they feel 308 00:15:18,600 --> 00:15:21,440 Speaker 1: like they've got a small enough balance they can significantly 309 00:15:21,480 --> 00:15:24,280 Speaker 1: lower their interest rate and they want to attack it quickly, 310 00:15:24,320 --> 00:15:26,680 Speaker 1: Like where should they go? So, yeah, I'm a big 311 00:15:26,720 --> 00:15:30,520 Speaker 1: fan of looking at brokers for refinancing. Credible is a 312 00:15:30,520 --> 00:15:32,440 Speaker 1: really big one you can take a look at, and 313 00:15:32,520 --> 00:15:34,920 Speaker 1: what a broker means is it compares a lot of 314 00:15:34,960 --> 00:15:38,640 Speaker 1: different companies for you based on a soft inquiry. So 315 00:15:38,800 --> 00:15:41,720 Speaker 1: FI is another good option that you can take into account, 316 00:15:41,840 --> 00:15:44,560 Speaker 1: but definitely one that you can compare a lot of 317 00:15:44,560 --> 00:15:47,280 Speaker 1: different offers all in the same place. And can you 318 00:15:47,320 --> 00:15:49,200 Speaker 1: compare the different fees as well when it comes to 319 00:15:49,240 --> 00:15:53,560 Speaker 1: refinancing those you should, yes, And there are still companies 320 00:15:53,600 --> 00:15:56,760 Speaker 1: out there that don't have fees associated with refinancing, so 321 00:15:56,800 --> 00:15:59,840 Speaker 1: I said, I would suggest finding those companies. There are 322 00:16:00,040 --> 00:16:03,120 Speaker 1: actually a lot of companies that offer cash rewards for 323 00:16:03,200 --> 00:16:06,480 Speaker 1: choosing their company to refinance with. Sometimes it's you know, 324 00:16:06,560 --> 00:16:08,800 Speaker 1: two hundred dollars, three hundred dollars, and you have the 325 00:16:08,840 --> 00:16:11,160 Speaker 1: option of taking that as cash or applying that to 326 00:16:11,160 --> 00:16:13,640 Speaker 1: your student loan balance. I would recommend applying that to 327 00:16:13,680 --> 00:16:17,280 Speaker 1: your student loan balance. So yes, definitely, I think it's important, 328 00:16:17,360 --> 00:16:19,400 Speaker 1: just like we talked about Matt on our Buying a 329 00:16:19,440 --> 00:16:23,440 Speaker 1: Home episode that people compare multiple apples to apples quotes 330 00:16:23,640 --> 00:16:25,800 Speaker 1: the same thing here. It doesn't hurt to look at 331 00:16:25,880 --> 00:16:28,960 Speaker 1: multiple lenders and kind of compare what they're offering you 332 00:16:29,040 --> 00:16:31,080 Speaker 1: based on not just the interest rate, but the fees 333 00:16:31,120 --> 00:16:33,440 Speaker 1: involved as well. And the great thing is that with 334 00:16:33,480 --> 00:16:35,640 Speaker 1: a site like sofi or credible, and we'll link to 335 00:16:35,640 --> 00:16:37,600 Speaker 1: those in the show notes, those are going to be 336 00:16:37,640 --> 00:16:41,080 Speaker 1: comparing many, many different lenders and that's just helpful, right 337 00:16:41,120 --> 00:16:43,000 Speaker 1: because you can see it all in one place. It's 338 00:16:43,040 --> 00:16:46,280 Speaker 1: like going to the Kayak of student loan refinancing. Yeah, exactly. 339 00:16:46,400 --> 00:16:49,520 Speaker 1: So there were multiple questions from Bridget and Frank asking 340 00:16:49,560 --> 00:16:51,600 Speaker 1: about paying their loans off early and is it worth 341 00:16:51,600 --> 00:16:53,680 Speaker 1: it to REFI for the lower rate, and I think, Megan, 342 00:16:53,680 --> 00:16:56,120 Speaker 1: you would say right that if they feel pretty confident 343 00:16:56,200 --> 00:16:58,840 Speaker 1: that they can pay off their student loans quickly and 344 00:16:58,840 --> 00:17:01,000 Speaker 1: they can find a lower rate in the refi world, 345 00:17:01,080 --> 00:17:06,639 Speaker 1: like they are perfect candidates for a private student loan refinance, right, definitely, yes, So, 346 00:17:06,760 --> 00:17:09,359 Speaker 1: and again you can usually choose the terms. You can 347 00:17:09,440 --> 00:17:13,959 Speaker 1: choose one year, two year, five years, seven, whatever really fits, 348 00:17:14,160 --> 00:17:17,479 Speaker 1: and you can pick the term that fits best with 349 00:17:17,520 --> 00:17:20,159 Speaker 1: what you can commit to on a monthly basis. But 350 00:17:20,240 --> 00:17:22,600 Speaker 1: you can always accelerate those payments and I would definitely 351 00:17:22,640 --> 00:17:25,879 Speaker 1: suggest doing that as well. And Megan Daniel was asking 352 00:17:25,920 --> 00:17:28,160 Speaker 1: should he pay attention to REFI offers in the mail 353 00:17:28,200 --> 00:17:30,280 Speaker 1: I mean, could that Could that hurt? No? I don't 354 00:17:30,320 --> 00:17:32,400 Speaker 1: think it get hurt. I think if you're getting those 355 00:17:32,400 --> 00:17:35,159 Speaker 1: offers in the mail that means your credit score is 356 00:17:35,320 --> 00:17:39,440 Speaker 1: within the range of maybe considering a lower interest rate refinance. 357 00:17:39,480 --> 00:17:42,320 Speaker 1: So definitely don't ignore them. Maybe consider it and do 358 00:17:42,359 --> 00:17:44,920 Speaker 1: a soft inquiry and see where it takes you. Yea Jell. 359 00:17:44,920 --> 00:17:46,200 Speaker 1: I feel like that's something you're really good at. Is 360 00:17:46,240 --> 00:17:48,040 Speaker 1: kind of keeping your mind open to like the different 361 00:17:48,040 --> 00:17:50,120 Speaker 1: deals that are out there, regardless of where they're coming from. 362 00:17:50,119 --> 00:17:52,000 Speaker 1: You know what I'm saying. Yes, sometimes I get those 363 00:17:52,040 --> 00:17:54,080 Speaker 1: mailers and I try to refinance the student loan I 364 00:17:54,080 --> 00:17:55,880 Speaker 1: don't even have because the deal is so good. I'm 365 00:17:55,920 --> 00:17:57,680 Speaker 1: just like, please let me get this low interest rate. 366 00:17:57,760 --> 00:17:59,760 Speaker 1: But they're like, you're a weirdo. You don't even have 367 00:17:59,840 --> 00:18:02,119 Speaker 1: to and loan, and then I feel weird at the 368 00:18:02,200 --> 00:18:05,480 Speaker 1: end of the phone call, so I know I'm odd alright. 369 00:18:05,520 --> 00:18:08,000 Speaker 1: So Carrie had a question for you, Megan. She says, 370 00:18:08,080 --> 00:18:10,479 Speaker 1: what are the benefits and risks of taking out a 371 00:18:10,520 --> 00:18:13,920 Speaker 1: personal loan to get better terms on an existing student loan? 372 00:18:14,560 --> 00:18:18,360 Speaker 1: So a personal loan is very comparable to a private 373 00:18:18,480 --> 00:18:22,119 Speaker 1: student loan. There's not a lot of differences between the two. 374 00:18:22,520 --> 00:18:25,200 Speaker 1: It's still a private debt, it's still based on your credit. 375 00:18:25,680 --> 00:18:29,199 Speaker 1: Personal loans, from what I've seen, can have higher interest 376 00:18:29,280 --> 00:18:31,919 Speaker 1: rates than what I've seen on branded student loan private 377 00:18:31,920 --> 00:18:35,160 Speaker 1: refinancing rates. So again that's where you go in and 378 00:18:35,200 --> 00:18:37,720 Speaker 1: you shop it around. You figure out what the best 379 00:18:37,760 --> 00:18:40,159 Speaker 1: avenue is for you, what the lowest interest rate is 380 00:18:40,280 --> 00:18:42,440 Speaker 1: that you can acquire. Yeah, that's what I've seen to 381 00:18:42,680 --> 00:18:45,320 Speaker 1: like personal loan, if you could somehow find a lower rate, 382 00:18:45,600 --> 00:18:47,840 Speaker 1: I mean, go for it. But typically, like you said, 383 00:18:48,080 --> 00:18:52,040 Speaker 1: personal loans carry a higher interest rate than private student loans. 384 00:18:52,080 --> 00:18:54,440 Speaker 1: And so looking at a site that looks at a 385 00:18:54,440 --> 00:18:56,840 Speaker 1: bunch of different lenders like Credible or so far, you're 386 00:18:56,840 --> 00:18:59,960 Speaker 1: going to find better rates typically then you would find 387 00:19:00,000 --> 00:19:02,760 Speaker 1: on a personal loan, even a Sweet Mailer for a 388 00:19:02,800 --> 00:19:05,080 Speaker 1: really low rate personal loan, you're just gonna get a 389 00:19:05,080 --> 00:19:08,080 Speaker 1: better rate on a an actual private student loan. Typically. Cool. 390 00:19:08,119 --> 00:19:10,280 Speaker 1: And we've got another question here from Julie, and she 391 00:19:10,480 --> 00:19:13,560 Speaker 1: asked one question that I've been asking myself is how 392 00:19:13,600 --> 00:19:16,960 Speaker 1: to balance investing into my future when I'm still paying 393 00:19:17,000 --> 00:19:19,560 Speaker 1: off my student loans. I think I'm pretty set on 394 00:19:19,600 --> 00:19:22,240 Speaker 1: opening a roth ira a with my tax refund and 395 00:19:22,280 --> 00:19:24,840 Speaker 1: the money I've saved up for it. But additional insight 396 00:19:25,000 --> 00:19:28,080 Speaker 1: is never a bad thing. So also, maybe how seriously 397 00:19:28,160 --> 00:19:30,480 Speaker 1: to take student loans? I love that how the money 398 00:19:30,520 --> 00:19:33,199 Speaker 1: is all about balance and mindful budgeting. And while I 399 00:19:33,240 --> 00:19:36,720 Speaker 1: feel I'm living my best life while making significant lifestyle 400 00:19:36,800 --> 00:19:39,280 Speaker 1: changes to pay off my student loans in three years, 401 00:19:39,440 --> 00:19:42,639 Speaker 1: there's always the potential that I'm tipping the scale either way. 402 00:19:42,760 --> 00:19:45,600 Speaker 1: How can you best keep yourself in check? It's a 403 00:19:45,720 --> 00:19:49,399 Speaker 1: very loaded question. I know I've said this before. I 404 00:19:49,440 --> 00:19:53,320 Speaker 1: think it comes back to your financial priorities, and maybe 405 00:19:53,320 --> 00:19:57,000 Speaker 1: that hones in on the overall goal here is to 406 00:19:57,160 --> 00:20:00,439 Speaker 1: really put together and list out what you're trying to 407 00:20:00,480 --> 00:20:03,840 Speaker 1: achieve in your finances. So talking about debt in the mix, 408 00:20:04,040 --> 00:20:07,600 Speaker 1: going back to our interest rate conversation earlier, if you've 409 00:20:07,600 --> 00:20:10,120 Speaker 1: got a lower interest rate on those student loans, they, 410 00:20:10,400 --> 00:20:13,280 Speaker 1: in my book, start to fall down by the lower 411 00:20:13,320 --> 00:20:17,600 Speaker 1: priority list in the financial hierarchy. Higher interests at in 412 00:20:17,640 --> 00:20:20,080 Speaker 1: the mix that you need to tackle. I would focus 413 00:20:20,119 --> 00:20:23,400 Speaker 1: on accelerating those payments first. But if you're already talking 414 00:20:23,440 --> 00:20:26,760 Speaker 1: about starting and opening a roth Ira, I think you're 415 00:20:26,920 --> 00:20:30,479 Speaker 1: you're on the move towards planning for your financial future. 416 00:20:30,840 --> 00:20:33,200 Speaker 1: And if saving is a really good goal of yours, 417 00:20:33,240 --> 00:20:35,439 Speaker 1: and you feel like you have your student loan situation 418 00:20:35,920 --> 00:20:38,720 Speaker 1: handled in the most efficient strategy based on all of 419 00:20:38,760 --> 00:20:41,119 Speaker 1: the comments we've had prior, then I think you're moving 420 00:20:41,119 --> 00:20:43,760 Speaker 1: in the right direction. So, in summary, I think you 421 00:20:43,800 --> 00:20:49,399 Speaker 1: can keep yourself in check by monitoring your progress in 422 00:20:49,440 --> 00:20:52,880 Speaker 1: all areas of your financial picture, your debt situation, you're 423 00:20:52,920 --> 00:20:57,040 Speaker 1: saving situation, your cash flow situation. If you feel like 424 00:20:57,160 --> 00:20:59,800 Speaker 1: all of those things are in good order, great. If 425 00:20:59,800 --> 00:21:01,600 Speaker 1: you've feel like there are certain areas that need more 426 00:21:01,640 --> 00:21:04,360 Speaker 1: attention than others, then that's where you start to redirect 427 00:21:04,440 --> 00:21:07,080 Speaker 1: your attention. Yeah. I think if Julie's question instead of 428 00:21:07,080 --> 00:21:10,120 Speaker 1: the wrath, if she inserted lifestyle inflation, then we're having 429 00:21:10,200 --> 00:21:14,200 Speaker 1: a completely different response to this, right, I think we're saying, no, Julie, 430 00:21:14,200 --> 00:21:16,119 Speaker 1: calm down and pay your student loans off first. But 431 00:21:16,560 --> 00:21:18,760 Speaker 1: hopefully the interest rate on her student loan is is 432 00:21:18,800 --> 00:21:20,920 Speaker 1: low enough that it's not that big of a deal 433 00:21:21,000 --> 00:21:24,000 Speaker 1: for her to instead decide to invest a little bit 434 00:21:24,000 --> 00:21:27,399 Speaker 1: more as opposed to prioritizing a quicker paydown of her 435 00:21:27,400 --> 00:21:30,840 Speaker 1: student loans. And as long as she's prioritizing something really 436 00:21:30,840 --> 00:21:34,320 Speaker 1: good for her financial future as opposed to just more 437 00:21:34,359 --> 00:21:37,000 Speaker 1: consumer spending today. Like, I mean, I think that's totally 438 00:21:37,000 --> 00:21:39,520 Speaker 1: cool and mad. Props to Julie, right, I think round 439 00:21:39,520 --> 00:21:42,919 Speaker 1: of applause. That's good stuff. I love that question. And 440 00:21:43,080 --> 00:21:45,440 Speaker 1: Daniel in our Facebook group had a similar question. You said, 441 00:21:45,440 --> 00:21:47,080 Speaker 1: I'm trying to figure out the right amount of money 442 00:21:47,080 --> 00:21:49,520 Speaker 1: to set aside monthly for my four oh one K 443 00:21:49,800 --> 00:21:53,440 Speaker 1: retirement plan versus using that money towards my monthly student 444 00:21:53,440 --> 00:21:55,960 Speaker 1: loan payment, Like, is there another rule of thumb for 445 00:21:56,000 --> 00:21:58,080 Speaker 1: how we can kind of figure that out? Yeah, so 446 00:21:58,160 --> 00:22:01,479 Speaker 1: I think, especially with your employer sponsored plan four oh 447 00:22:01,520 --> 00:22:03,920 Speaker 1: one k RATH four oh one K, if you have 448 00:22:04,040 --> 00:22:08,200 Speaker 1: a match, absolutely go for that match before accelerating any 449 00:22:08,240 --> 00:22:11,320 Speaker 1: debt payment. Hands down, Again, that's a percent return on 450 00:22:11,359 --> 00:22:13,840 Speaker 1: your money right there. So as long as you're getting 451 00:22:13,880 --> 00:22:17,479 Speaker 1: the match, I would say, redirect those payments towards any 452 00:22:17,560 --> 00:22:21,280 Speaker 1: higher interest debt um And then yeah, if if your 453 00:22:21,480 --> 00:22:24,439 Speaker 1: if your student loan payment is again lower than your 454 00:22:24,480 --> 00:22:28,399 Speaker 1: annual income and your prioritizing paying that off quicker and 455 00:22:28,520 --> 00:22:30,560 Speaker 1: all of your other higher interest debt is out of 456 00:22:30,560 --> 00:22:34,440 Speaker 1: the mix. Um. I think yes, start accelerating that payment 457 00:22:34,640 --> 00:22:37,800 Speaker 1: if that fits within your overall plan. If your emergency 458 00:22:37,840 --> 00:22:41,399 Speaker 1: savings needs attention, though, maybe consider contributing or doing a 459 00:22:41,480 --> 00:22:44,880 Speaker 1: hybrid approach towards that. That way, you're tackling two goals 460 00:22:45,000 --> 00:22:48,359 Speaker 1: at once. Yeah, so quick props to Julie and Daniel 461 00:22:48,400 --> 00:22:50,919 Speaker 1: for asking the right questions. They're not asking, you know, 462 00:22:50,920 --> 00:22:52,879 Speaker 1: should I pay down my student loans or should I 463 00:22:52,880 --> 00:22:55,480 Speaker 1: go to Tahiti? Uh, They're talking about should I pay 464 00:22:55,480 --> 00:22:58,480 Speaker 1: down my student loans, which is effectively paying themselves back 465 00:22:58,520 --> 00:23:01,160 Speaker 1: by not having to pay interest, or should I save 466 00:23:01,240 --> 00:23:03,920 Speaker 1: and put this money in the actual market in Tahiti. 467 00:23:04,080 --> 00:23:05,520 Speaker 1: It's a good goal to have after you pay the 468 00:23:05,520 --> 00:23:09,160 Speaker 1: student loans off. Yeah, that's how you celebrate. So after 469 00:23:09,160 --> 00:23:11,159 Speaker 1: the break, we're gonna get to a few more listener questions. 470 00:23:19,960 --> 00:23:22,040 Speaker 1: All right, we got a few more awesome student loan 471 00:23:22,119 --> 00:23:24,520 Speaker 1: questions that we need to get to from our Facebook group. 472 00:23:24,760 --> 00:23:27,119 Speaker 1: Bridget and Steve ask something super similar, So we're going 473 00:23:27,160 --> 00:23:29,159 Speaker 1: to combine them. Sorry, guys, you guys get them together 474 00:23:29,200 --> 00:23:32,160 Speaker 1: in the same question. So the question essentially was what 475 00:23:32,280 --> 00:23:34,159 Speaker 1: order should we pay off our student loans? Is there 476 00:23:34,160 --> 00:23:36,840 Speaker 1: a benefit to paying off the smaller balances. First, how 477 00:23:36,840 --> 00:23:39,200 Speaker 1: do you make sure extra payments are going towards the 478 00:23:39,280 --> 00:23:42,359 Speaker 1: principal balance? So, yeah, Megan, what do you think of that? Yeah, 479 00:23:42,400 --> 00:23:45,119 Speaker 1: so two separate questions. First question, is there a benefit 480 00:23:45,119 --> 00:23:48,240 Speaker 1: to paying off the smaller balances? First? In my opinion, 481 00:23:48,400 --> 00:23:51,160 Speaker 1: the only benefit to doing the I think that's called 482 00:23:51,160 --> 00:23:54,399 Speaker 1: the snowball approach, where you tackle the smaller balance first 483 00:23:54,440 --> 00:23:57,840 Speaker 1: and then roll your accelerated payments into the next smallest balance. 484 00:23:58,359 --> 00:24:01,439 Speaker 1: That strategy is going to have you you paying a 485 00:24:01,440 --> 00:24:04,600 Speaker 1: little more interest over time, but psychologically it's going to 486 00:24:04,680 --> 00:24:07,080 Speaker 1: give you those quick wins and it's gonna continue to 487 00:24:07,080 --> 00:24:10,679 Speaker 1: motivate you to trudge forward. And the next question was 488 00:24:10,760 --> 00:24:13,320 Speaker 1: how do you make sure extra payments are going towards 489 00:24:13,359 --> 00:24:16,720 Speaker 1: principal balance? So there is a way you can do 490 00:24:16,800 --> 00:24:20,680 Speaker 1: that through your service or you have to intentionally make 491 00:24:20,720 --> 00:24:22,960 Speaker 1: a separate payment. And I believe it gives you the 492 00:24:22,960 --> 00:24:25,639 Speaker 1: option to designate where you want it to go, if 493 00:24:25,680 --> 00:24:28,640 Speaker 1: you want it to go towards principle or towards unpaid interest. 494 00:24:29,160 --> 00:24:31,880 Speaker 1: So that's gonna be key there. If you're wanting to 495 00:24:31,960 --> 00:24:35,680 Speaker 1: make sure extra payments go towards something specific. And then 496 00:24:35,720 --> 00:24:37,879 Speaker 1: we've got another question here, this one from Jonah and 497 00:24:37,960 --> 00:24:41,520 Speaker 1: he asked, does paying off student loans in full affect 498 00:24:41,520 --> 00:24:43,560 Speaker 1: your credit score in the same way that closing a 499 00:24:43,640 --> 00:24:47,000 Speaker 1: credit card account of the same age does. For example, 500 00:24:47,000 --> 00:24:49,080 Speaker 1: he said, my loans are small and the oldest thing 501 00:24:49,119 --> 00:24:51,240 Speaker 1: all my credit history by far, and I'm concerned that 502 00:24:51,280 --> 00:24:54,240 Speaker 1: paying them off in a lump sum the summer will 503 00:24:54,280 --> 00:24:57,040 Speaker 1: make getting my first mortgage towards the end of the 504 00:24:57,119 --> 00:24:59,640 Speaker 1: year harder and not worth the tiny amount of interest. 505 00:24:59,680 --> 00:25:03,000 Speaker 1: I'd say, all right, I'll tackle Jonas question so because 506 00:25:03,040 --> 00:25:05,200 Speaker 1: it's more of a credit question than even a student 507 00:25:05,200 --> 00:25:09,119 Speaker 1: loan question. And the answer is, if you pay off 508 00:25:09,240 --> 00:25:12,600 Speaker 1: a student loan and that is one of the only 509 00:25:13,240 --> 00:25:15,600 Speaker 1: pieces of credit that you have in your credit mix, 510 00:25:16,080 --> 00:25:18,439 Speaker 1: there is a chance there's a good chance that it 511 00:25:18,440 --> 00:25:21,040 Speaker 1: could ding your credit score a little bit. Let's say 512 00:25:21,080 --> 00:25:23,840 Speaker 1: you have just a lot of other pieces of recurring 513 00:25:23,920 --> 00:25:27,000 Speaker 1: credit though that that show up on your credit score, 514 00:25:27,280 --> 00:25:29,879 Speaker 1: then it's not gonna affect you nearly as much. But 515 00:25:30,000 --> 00:25:32,440 Speaker 1: if that student loan is one of the only things 516 00:25:32,480 --> 00:25:34,960 Speaker 1: that you have as credit in your name, it's gonna 517 00:25:34,960 --> 00:25:36,800 Speaker 1: be a little bit of a bigger drop to your 518 00:25:36,800 --> 00:25:39,080 Speaker 1: credit score when you do pay that off. I mean, 519 00:25:39,080 --> 00:25:41,000 Speaker 1: obviously it's a day that you want to celebrate, well, 520 00:25:41,040 --> 00:25:43,880 Speaker 1: who yes, um student loan debt free, and you don't 521 00:25:43,880 --> 00:25:46,560 Speaker 1: want to delay that just because of that credit score drop. 522 00:25:46,680 --> 00:25:49,000 Speaker 1: But you do want to be careful because, yeah, when 523 00:25:49,000 --> 00:25:52,400 Speaker 1: you're applying for a mortgage, that tiny credit score drop, 524 00:25:52,480 --> 00:25:54,360 Speaker 1: like Matt and I talked about on in a recent episode, 525 00:25:54,520 --> 00:25:56,840 Speaker 1: you can have big ramifications on the interest rate that 526 00:25:56,880 --> 00:25:59,919 Speaker 1: you end up getting on a mortgage loan, and you 527 00:26:00,080 --> 00:26:02,679 Speaker 1: just don't want to compromise that. So my tip to 528 00:26:02,760 --> 00:26:05,560 Speaker 1: you is to make sure that your credit is solid. 529 00:26:05,800 --> 00:26:08,960 Speaker 1: If you are in the seven sixty or above range, 530 00:26:09,200 --> 00:26:11,480 Speaker 1: you want to make sure that you're not on that 531 00:26:11,560 --> 00:26:14,960 Speaker 1: borderline because any sort of small move like paying off 532 00:26:14,960 --> 00:26:17,200 Speaker 1: that student loan could mean an eight to ten point 533 00:26:17,200 --> 00:26:20,040 Speaker 1: twelve point drop. And so if you're at seven sixty, well, 534 00:26:20,160 --> 00:26:22,520 Speaker 1: that dropped down to seven forty eight could make a 535 00:26:22,560 --> 00:26:24,639 Speaker 1: big difference on the interest rate that you get. But 536 00:26:24,680 --> 00:26:27,600 Speaker 1: if you're at like seven eighty or above, you're totally fine, 537 00:26:27,640 --> 00:26:29,840 Speaker 1: Like it's not going to impact you enough to change 538 00:26:30,280 --> 00:26:33,120 Speaker 1: a potential interest rate. But really, when it comes down 539 00:26:33,119 --> 00:26:35,840 Speaker 1: to it, paying off your student loan will affect every 540 00:26:35,840 --> 00:26:39,880 Speaker 1: single person differently based on their specific credit mix, So 541 00:26:40,119 --> 00:26:42,119 Speaker 1: just just make sure you have other pieces of credit 542 00:26:42,160 --> 00:26:45,120 Speaker 1: available that are factored in EDUL. That I mean Jona's question. 543 00:26:45,160 --> 00:26:47,440 Speaker 1: That's a tough one because, like you said, it affects 544 00:26:47,480 --> 00:26:50,280 Speaker 1: everyone's credit differently. But just keep in mind that the 545 00:26:50,359 --> 00:26:53,119 Speaker 1: length of your credit history, that only makes that fiftent 546 00:26:53,200 --> 00:26:55,560 Speaker 1: of your credit score. So he's talking about getting a 547 00:26:55,600 --> 00:26:58,280 Speaker 1: mortgage later in the year, several months is more than 548 00:26:58,400 --> 00:27:01,720 Speaker 1: enough time for it to rebound in twenty points, no problem, 549 00:27:01,760 --> 00:27:04,080 Speaker 1: and real quick. We wanted to mention some points that 550 00:27:04,320 --> 00:27:07,000 Speaker 1: in a Stagia posting in the Facebook group. These were 551 00:27:07,040 --> 00:27:09,720 Speaker 1: all just awesome ways to think about college in general, 552 00:27:09,760 --> 00:27:11,840 Speaker 1: and we just love where her head is ats when 553 00:27:11,880 --> 00:27:13,720 Speaker 1: it comes to college. And so the first thing she 554 00:27:13,720 --> 00:27:16,480 Speaker 1: said was don't go to college just because everyone else 555 00:27:16,600 --> 00:27:19,520 Speaker 1: is doing it. And I love that because that's exactly 556 00:27:19,560 --> 00:27:23,199 Speaker 1: what I did. And I was so clueless when I 557 00:27:23,200 --> 00:27:25,199 Speaker 1: was in high school. But seriously, one of the main 558 00:27:25,240 --> 00:27:28,080 Speaker 1: reasons I started applying for colleges was because my friends were. 559 00:27:28,400 --> 00:27:30,240 Speaker 1: It was something that I didn't really have the next 560 00:27:30,280 --> 00:27:31,920 Speaker 1: step on the horizon as far as what I was 561 00:27:31,920 --> 00:27:34,160 Speaker 1: gonna do, and folks were like, oh, yeah, I'm starting 562 00:27:34,160 --> 00:27:36,240 Speaker 1: to apply to go to college, and I thought, oh cool, 563 00:27:36,480 --> 00:27:39,680 Speaker 1: I guess I should do that as well. Not exactly, 564 00:27:39,800 --> 00:27:42,439 Speaker 1: I was clueless, man, And so if we have listeners 565 00:27:42,440 --> 00:27:44,359 Speaker 1: out there who are in high school, do not be 566 00:27:44,520 --> 00:27:48,080 Speaker 1: like Mats, because yeah, I was completely clueless. Luckily I 567 00:27:48,160 --> 00:27:50,680 Speaker 1: ended up not working out tons of money for student loans. 568 00:27:50,680 --> 00:27:54,200 Speaker 1: I had scholarship got lucky enough to score that. So yeah, 569 00:27:54,280 --> 00:27:57,640 Speaker 1: be sure to consider some alternatives to you know, private schools, 570 00:27:57,920 --> 00:28:00,679 Speaker 1: schools that would require you to take out student loans. 571 00:28:00,960 --> 00:28:05,080 Speaker 1: Anastasia specifically mentioned trade schools, and I think that those 572 00:28:05,119 --> 00:28:08,200 Speaker 1: are especially in today's economy where a lot of the 573 00:28:08,280 --> 00:28:12,600 Speaker 1: jobs that are unfilled are specifically skilled trades people. That's 574 00:28:12,840 --> 00:28:14,680 Speaker 1: a great thing to consider, especially if you're good with 575 00:28:14,720 --> 00:28:18,119 Speaker 1: your hands. If going to college doesn't register on your radar, 576 00:28:18,480 --> 00:28:20,479 Speaker 1: don't just go because everyone else is doing it right, 577 00:28:20,520 --> 00:28:24,159 Speaker 1: and consider an alternative path because that can actually be 578 00:28:24,200 --> 00:28:27,320 Speaker 1: more lucrative for you. You can take out much less debt, 579 00:28:27,800 --> 00:28:30,200 Speaker 1: it's a much less risky proposition if it's something you're 580 00:28:30,240 --> 00:28:33,520 Speaker 1: interested in and you naturally gravitate towards. And she also 581 00:28:33,640 --> 00:28:36,000 Speaker 1: mentioned to think about what your state or city offers 582 00:28:36,000 --> 00:28:39,720 Speaker 1: in regards to free college, and she specifically mentioned Tennessee. 583 00:28:39,920 --> 00:28:42,040 Speaker 1: They've got a great program, Georgia. We've all all three 584 00:28:42,040 --> 00:28:44,160 Speaker 1: of us here have taken part in the Hope Scholarship. 585 00:28:44,520 --> 00:28:46,200 Speaker 1: Almost half of the states in the country in the 586 00:28:46,240 --> 00:28:49,360 Speaker 1: US now have either some sort of incentivized or scholarship 587 00:28:49,400 --> 00:28:53,240 Speaker 1: provided higher education for those who qualify. So there's a 588 00:28:53,240 --> 00:28:55,600 Speaker 1: lot of great options out there. Very soon, we're gonna 589 00:28:55,600 --> 00:28:57,840 Speaker 1: do an episode on just different ways to think about 590 00:28:57,960 --> 00:29:01,400 Speaker 1: higher education, Ways to reduce that aust and essentially just 591 00:29:01,440 --> 00:29:04,320 Speaker 1: get smart for less money. All right, Matt, that was 592 00:29:04,320 --> 00:29:06,600 Speaker 1: good stuff. I feel like student loans big topic, but 593 00:29:06,640 --> 00:29:08,200 Speaker 1: you know what, we're able to kind of boil it 594 00:29:08,240 --> 00:29:11,280 Speaker 1: down into something digestible and answer some listener questions. So 595 00:29:11,360 --> 00:29:13,040 Speaker 1: that was super fun. Let's get back to the beer 596 00:29:13,040 --> 00:29:16,120 Speaker 1: real quick. Westbrook can Can so it's got this awesome 597 00:29:16,160 --> 00:29:18,040 Speaker 1: picture of a lady doing a can can dance on 598 00:29:18,080 --> 00:29:20,520 Speaker 1: the front of the bottom it. Yeah. Right, this is 599 00:29:20,600 --> 00:29:23,000 Speaker 1: a five year old beer that my friend Jeff at 600 00:29:23,040 --> 00:29:26,280 Speaker 1: my favorite package store just gave me because he's a sweetheart. 601 00:29:26,320 --> 00:29:28,160 Speaker 1: So what do you guys think of this beer? My 602 00:29:28,280 --> 00:29:31,840 Speaker 1: word would be powerful. I really liked this one. I 603 00:29:31,880 --> 00:29:34,160 Speaker 1: like that how to Kick had like a can can 604 00:29:34,200 --> 00:29:36,720 Speaker 1: like kick how the can can kick. There we go. 605 00:29:37,080 --> 00:29:38,719 Speaker 1: I'm a huge fan of this beer as well. Like 606 00:29:38,760 --> 00:29:40,760 Speaker 1: my first sip, I almost wanted to go back and 607 00:29:41,040 --> 00:29:42,840 Speaker 1: have us go back to the beer at the very beginning. 608 00:29:42,960 --> 00:29:45,720 Speaker 1: Just that red wine barrel mixed with that quad There's 609 00:29:45,720 --> 00:29:47,640 Speaker 1: just so many flavors going on, Like you taste that 610 00:29:47,640 --> 00:29:49,880 Speaker 1: would it almost tastes kind of like bourbon barrel ish, 611 00:29:49,920 --> 00:29:52,200 Speaker 1: Like there was like a sweetness to it. This was 612 00:29:52,400 --> 00:29:55,360 Speaker 1: a fantastic beer and I would totally agree with Megan 613 00:29:55,400 --> 00:29:58,560 Speaker 1: pretty powerful because I think it's so. I'm glad we 614 00:29:58,600 --> 00:30:00,680 Speaker 1: split this one three ways. Matt. In a while back, 615 00:30:00,720 --> 00:30:02,880 Speaker 1: we talked about the how the age of a beer, 616 00:30:02,920 --> 00:30:05,160 Speaker 1: how long it ages in the barrel, can affect the 617 00:30:05,200 --> 00:30:07,560 Speaker 1: flavors that are imparted. And this one was aged for 618 00:30:07,600 --> 00:30:10,520 Speaker 1: three years, which is way more than the standard amount 619 00:30:10,560 --> 00:30:12,760 Speaker 1: of time that you put something in a barrel, like 620 00:30:12,880 --> 00:30:16,120 Speaker 1: ventures into Scotch territory. Almost yeah, exactly, And so I 621 00:30:16,120 --> 00:30:19,240 Speaker 1: feel like the red wine flavors came through big time. 622 00:30:19,600 --> 00:30:21,160 Speaker 1: I feel like that the late the time that it 623 00:30:21,240 --> 00:30:22,960 Speaker 1: was aged and then on top of that, the fact 624 00:30:23,000 --> 00:30:25,120 Speaker 1: that it's just been hanging out in the bottle for 625 00:30:25,120 --> 00:30:27,720 Speaker 1: for a bunch of time too. This was delicious. It 626 00:30:27,800 --> 00:30:30,680 Speaker 1: was like a rare treat and we're just grassiest to 627 00:30:30,720 --> 00:30:32,560 Speaker 1: my friend Jeff for for handing us this beer. It 628 00:30:32,560 --> 00:30:35,760 Speaker 1: was so good. Thanks Jeff. We appreciate it. All. Right, 629 00:30:35,840 --> 00:30:38,280 Speaker 1: let's get to our final thoughts. If you are considering 630 00:30:38,400 --> 00:30:41,520 Speaker 1: refinancing your student loans to a private loan, you want 631 00:30:41,520 --> 00:30:45,160 Speaker 1: to make sure that your balance is significantly lower than 632 00:30:45,200 --> 00:30:47,240 Speaker 1: your annual salary, and you want to make sure that 633 00:30:47,280 --> 00:30:50,400 Speaker 1: you can easily handle those monthly payments. Yeah, because if 634 00:30:50,440 --> 00:30:53,400 Speaker 1: you can't handle those monthly payments, well, you know what, 635 00:30:53,520 --> 00:30:56,480 Speaker 1: you've just lost a lot of flexibility when it comes 636 00:30:56,520 --> 00:30:59,600 Speaker 1: to forbearance and deferment. Private student loans just don't have 637 00:30:59,680 --> 00:31:03,880 Speaker 1: the same protections that federal ones do. And lastly, you 638 00:31:03,920 --> 00:31:07,440 Speaker 1: can't go back once you refinance into a private student loan, 639 00:31:07,600 --> 00:31:10,000 Speaker 1: you can't go back to the federal system. And last point, 640 00:31:10,040 --> 00:31:12,400 Speaker 1: join our Facebook group because it's so much fun. I 641 00:31:12,440 --> 00:31:14,680 Speaker 1: love that we got to tackle some listener questions on 642 00:31:14,720 --> 00:31:16,920 Speaker 1: this episode on last episode. We don't get to do 643 00:31:16,960 --> 00:31:19,040 Speaker 1: it every show, but it's super fun to get to 644 00:31:19,040 --> 00:31:22,320 Speaker 1: do so, and if you have questions, our Facebook group 645 00:31:22,360 --> 00:31:24,840 Speaker 1: is a great place to post them and kind of 646 00:31:24,880 --> 00:31:27,640 Speaker 1: get that hive mind working to generate answers for you. 647 00:31:27,920 --> 00:31:30,000 Speaker 1: Just some awesome people in there. So yeah, just go 648 00:31:30,080 --> 00:31:32,480 Speaker 1: to Facebook dot com and type in how to Money 649 00:31:32,480 --> 00:31:34,280 Speaker 1: in the search bar. That's right, friends, So I think 650 00:31:34,280 --> 00:31:36,200 Speaker 1: that's gonna be it for this episode, Megan. I hope 651 00:31:36,240 --> 00:31:38,560 Speaker 1: you've enjoyed recording with us. It's been a ton of 652 00:31:38,560 --> 00:31:40,680 Speaker 1: fun and hopefully we'll have you back on soon. Yeah. 653 00:31:40,680 --> 00:31:43,320 Speaker 1: Thanks for having me, guys, you got it, and we 654 00:31:43,360 --> 00:31:46,479 Speaker 1: will have links to those student loan refinancing companies on 655 00:31:46,520 --> 00:31:49,160 Speaker 1: our show notes at how to money dot com. And 656 00:31:49,200 --> 00:31:51,040 Speaker 1: you know what, I want to thank everyone who's left 657 00:31:51,120 --> 00:31:53,600 Speaker 1: us or review recently. We have gotten a ton of reviews, 658 00:31:54,040 --> 00:31:55,960 Speaker 1: and we know we read every single one of us, 659 00:31:55,960 --> 00:31:59,040 Speaker 1: so we really appreciate the feedback. We really appreciate you 660 00:31:59,160 --> 00:32:01,719 Speaker 1: sharing with others who might be looking for a new 661 00:32:01,760 --> 00:32:03,520 Speaker 1: podcast to listen to you. So, you know what, We're 662 00:32:03,520 --> 00:32:05,000 Speaker 1: not even going to ask you to leave a review 663 00:32:05,040 --> 00:32:10,160 Speaker 1: this time. Just thank you big thanks. So until next time, Joel, 664 00:32:10,280 --> 00:32:27,120 Speaker 1: Best Friends Out, Best Friends Out? Oh No, I've made 665 00:32:27,120 --> 00:32:27,880 Speaker 1: a great mistake.