I am recently married and between the two of us we have some credit card debt and students loans. Because of our wedding and moving into a new apartment, we have increased our debt. (I hate to say it, but it’s the truth.) We live in a very expensive part of California and don’t have tons of free flowing cash running around. I am a teacher and he is a restaurant manager. I have picked up a second job that has been making it easier to make ends meet, but I feel like my payment is only covering a chunk of the actual money and the rest is interest.
How do I make a larger payment without so much going to interest?
How long until our credit goes up?
I am getting papers that say they will help decrease the payment? How do I know these are legit places? If they do help what does it cost me?
It says it will affect your credit, but how badly?
I’d love to wave a wand and help you realign your perspective on this.
The best way to look at your situation is by looking forward, not backward. So what do I mean by that?
I don’t know if you have federal or private student loans and that makes a big difference. For private student loans, there are far fewer options to deal with the payments. For the federal student loans, there are some better options to either get the loans forgiven in the future or get the payments reduced. Please let me know in the comments section below if your student loans are federal or private.
I’m going to assume you are both younger than 40 or so. And I’m also not going to judge you at all about the debt you accumulated.
Strictly talking from a mathematical point of view and considering the future uncertainty of Social Security or retirement plans my advice is different than most.
You see I’d rather prepare you for a better future than fixing the past.
I also believe that falling into problem debt for the vast majority of people is the teachable moment on what not to do or repeat.
Here is the basic math problem. Retirement funds grow because of the amount you save and the amount of time the savings are invested.
If you spent the next 5-7 years not saving as much as you can and trying to slowly dig yourself out of this hole it can easily cost you a half a million dollars in lost retirement money.
Here an example assuming your non-student loan monthly payment is $300 and you are 35-years-old.
You can run your specific numbers using my online calculator.
Considering you can never repalce lost time and it is easy to rebuild credit after bankruptcy, maybe you should at least talk to a local bankruptcy attorney about your situation.
You can find a good local bankruptcy attorney and have a free discussion about what bankruptcy would mean for you. Bankruptcy is the fastest way to get a fresh start for the least amount of money.
As soon as I hear back from you in the comments about your student loans I can give you some advice on those.