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DAY, MONTH 00, 2015 |
Sponsored Newspapers In Education Content
DEBT
When someone spends more money than they have, they can wind up in debt, which in some
cases may lead to filing for bankruptcy. Bankruptcy should be a last resort, however, as it will
have long-lasting detrimental impacts on your credit report. It would be better to work with a
non-profit credit counselor to find a way to pay back the debt.
Here are some tips to pay back debt:
• Make it a S.M.A.R.T. goal
When trying to get out of debt, setting a goal for you to work toward can be helpful.
The S.M.A.R.T. acronym stands for Specific, Measurable, Attainable, Realistic and Time
sensitive. An example of a S.M.A.R.T. goal would be, “I’m going to pay off 50 percent
of my $200.00 credit card debt in the next two months.”
• Assess the damage
Look at how much money you owe and who you owe it to. Are you spending money on
necessities or wants? What unnecessary costs can you cut out?
• Look for “leaks”
Leaks are small, unnecessary expenses that you make often. What most people don’t
realize is that these expenses add up fast. Take a cup of coffee for example. If you buy
four cups of coffee a week at $5 a cup, that is $20 a week, $80 a month, and $960
a year. That’s almost $1,000 a year you could use to pay off a debt instead.
• Create a budget
A budget will help you plan where you are going to spend your money. You can allocate
money to your debt and savings account first, then to your bills. Invest in your future:
adding money to a savings account is important. Whether it’s for retirement, emergencies,
or just to have a financial cushion, it’s best to have money set aside.
DEBT AND STUDENT LOANS
Student debt is good debt. It is an investment in your future. If you aren’t careful, however,
student debt and loans can get out of control and be a drain on your finances – and your
credit report - for a long time. Student loans can no longer be forgiven in bankruptcy, and
can even sometimes be passed to survivors in the event of death.
There are several different types of student loans:
• Subsidized Stafford Loans
These loans are taken out in the student’s name and available regardless of need. The
federal government will pay the interest fees if the student is in school, in their grace
period or in approved deferment.
• Unsubsidized Stafford Loans
These loans are available regardless of need, but the student pays the interest fees the
entire life of the loan.
• Parent PLUS Loans
These loans are borrowed by the student’s parents, it’s up to them who pays it off.
• Perkins Loans
These loans are available to students with great financial need.
• Consolidation Loans
You can take out a consolidation loan in order to combine all eligible federal student
loans into one payment. Consolidation loans use a weighted average interest rate based
on your current interest rates and how much you owe on your loans.
• Private Loans
These are loans not funded by the government, you can take them out from your own
bank or credit union.
MANAGE YOUR DEBT
