First and foremost - today is election day! Hopefully, you all went out and voted! It is a historic election and it is your future at stake. So just like everything else with Generation Millionaire - take a good look at your values and your beliefs and use your power and vote!
Plus on a funny note -You have to love this country - that we can have comics make fun of everything! I watched the Saturday Night Live Prime Time Special last night and haven't laughed that hard in years!! Freedom nothing like it - whether in free speech or personal finance!
Okay, so more on student loans. I am going to talk about repayment schedules. In previous blogs we discussed lifestyle options and ways to increase your payback methods, reduce the amount you borrow and choices on how you spend your money. So let's put some numbers out there.
The average undergraduate student loan amount is $20,000. We will assume a 7% interest rate. Private loans in the past 5 years have been as low as 4% and as high as 9%, they fluctuate with prime interest rates. The distressing issue is they are not fixed rates and just like with housing - the amount you pay in interest will vary depending on the current rates.
My opinion is 20 years to repay a loan is way to long..... Again, do you want to finish paying off your loans as your kids are starting college???? So now is the time to make decisions. I used the calculator at Finaid
5 year repayment - $396.02 a month. Interest on loan - $3761.49 = $23,761.49
10 year repayment - $232.22 a month. Interest on loan - $7865.87 = $27,865.87
15 year repayment - $179.77 a month. Interest on loan - $12,357.22 = $32,357.22
20 year repayment - $155.06 a month. Interest on loan - $17214.29 = $37,214.29
By extending the payments you are looking at paying an additional $13452.80 and will be strapped an additional 15 years!!!!
Your budge will never be simpler than as a college student. Once you graduate if you continue to live simply for a few years - you can free yourself and have additional money as you make other life changes. Buying a home, getting married, kids, travel etc. Read through some of the earlier blogs on choices that recent graduates made to get a jump on paying back their loans.
If you have other concerns please post a comment or send me an email. The next blog will be on the basic concepts of Generation Millionaire - then I will discuss credit card debt.
Stay tuned.......and enjoy your freedom and vote........
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