Let Me Clarify
I don’t know about you, but lately I’ve been seeing more and more in the news, in magazines, and online about the “student loan crisis”. As appropriate as the term “crisis” may be, I find it shocking when I meet someone that doesn’t care about, or doesn’t even know, what their student loan situation looks like.
Let me clarify.
Having student loans myself, I get it. Loans are not fun. And more often than not, the loan balances seem overwhelming. But one thing to remember with just about all financial planning is that some action is better than no action. And as daunting as the situation may be, it’s important to get organized and plan for what’s to come.
You should be aware of the many ways these loans can impact your long-term financial future. What happens when you receive your surprise loan bills in the mail? If you’re able to afford these payments, will you still have enough discretionary cash flow to afford your other goals? What about paying for that dream wedding, or having a child, or buying a home? And if you choose to ignore these payments, keep in mind that even your wages can be garnished in certain situations. I’m not trying to create fear, but want to point out the realities.
So, how you can get headed in the right direction?
Know the situation. Believe it or not, it’s not that uncommon for graduates to be in the dark when it comes to knowing all the different loans they have out there. Start with running a credit report to see the list of student loans in your name.
Get organized. Once you have accurate loan information, organize the balances, interest rates, payments, and repayment terms. This should help you identify loans with above average interest rates, the expected time of repayment, and total monthly payment amounts.
Know your options. Knowing your options comes in many forms. Not everyone qualifies for every option, and not every option will be the right fit, but it is important to be informed about what’s out there. This could include student loan forgiveness programs, lender-specific repayment options, consolidation, or refinancing.
Take it seriously. Unfortunately, the loans aren’t going anywhere (but up as interest accrues!) if you choose to ignore them. The sooner you get organized and start planning the better.
Of course, this short blog post is not going to solve the loan crisis that we find ourselves in, but hopefully it gets you thinking about how you can make the most out of your situation. Rest assured that you’re not alone. There are a variety of organizations, resources, and financial planners (including us!) that can help you develop a plan to start tackling those loans.
As we embark on this clarifying journey together, I encourage you to submit any ideas, topics, or questions to firstname.lastname@example.org. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendation for any individual. “Let Me Clarify” is a weekly blog containing Chad Baxter’s insights and thoughts about a variety of topics. To learn more about Chad, click here
This information is not intended to be a substitute for individualized legal advice. Please consult your legal advisor regarding your specific situation. Clarify Wealth Management and LPL Financial do not provide legal advice or services. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All investing involves risk including loss of principal. No strategy assures success or protects against loss. There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk. Rebalancing a portfolio may cause investors to incur tax liabilities and/or transaction costs and does not assure a profit or protect against a loss.