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Friday, February 22, 2013

The Growing Debt

I don't know how many of you out there have student debt, but I bet you know someone that has a ton of it. Like many, I funded my way through school by getting easy to access government money. It was as easy as filling out a form and e-signing your life away. Going to USC for a master's degree was completely worth the debt but paying it off is another story.

With a federal loan that racked up to more than 40k for just two years of school I felt that 20k a year was a bit excessive. I know many of you going to law or medicine can only wish for such a low amount to pay back as the debt can easily extend pass 100k. Paying back the loan in a reasonable amount of time has been the toughest problem for me to solve. I have to consider either paying off loans faster or save up for a bigger expense later down the line.

Usually, I tend to want to pay as much as I can to loan each month, but a series of unfortunate events and pleasure trips has forced me to reconsider. My current plan is to make minimum payments as I use the loan money to pay off credit card bills and other expense. My current minimum payment is about ~$600 a month to Sallie Mae and Nelnet, at that rate it will take around 6.5 years to pay off everything. So I guess, I am not buying a car for 6.5 years. 

I think the key thing to take away from this was that I didn't realize how much of a bite loans take every month. The money literally can go to something more useful for the long term such as a car or house. Instead I have to delay those things to possibly after I am 30.

For those of you that are taking on loans that are greater than my amount, just know that when you get out and have to start paying them back it will hurt in your pocketbook for a long time.  

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