Minimize Debt to Get Ahead in Life: Pay Off Those Student Loans

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Standard repayment plans for student loans are 10 years. In this time college graduates will find themselves paying thousands of dollars in interest. In this time many things are put on hold such as marriage, home ownership and children.

protesters-take-part-in-an-occupy-student-debt-march-in-new-york-in-2011But why wait that long? Why wait 10 years to get out of debt? By paying of your student loans ASAP you will find yourself a lot closer to not only living debt free, but also to being able to move forward with your life saving for your future and comfortably having a family.

So where to start? Here are some ways to pay off student loans quickly:

Reduce Interest Rates

Many lenders have some kind of discounted interest rate available for those that set up direct deposit (this includes the department of education – lender for all federal student loans). This discount usually ranges from 0.15% to 0.30%. The incentive for the lender is that when people set up direct deposit it is more likely that they will receive payments on-time. If you do take the full 10 year term to pay off your debt, this small interest rate reduction could save you hundreds of dollars on a loan of $20K or more.

In addition you should check with your lender to see if there are any other ways to reduce your interest rate, some lenders will also offer incentives to people with high credit scores or a history of on-time payments. It’s also always good to call back every year to see if there are any ways to get reduced rates. You won’t know unless you ask.

The final way that you can look at reducing your rates is to look at debt consolidation. Other lenders may be able to offer you better rates for moving your debt over to their banks.

Make Larger or More Frequent Payments

This is the easiest and most obvious way to pay off debt faster. So, how much more should you pay? First you should determine what percentage of your income you can afford to comfortably put towards your student loans. Most people pay around 10%, although, depending on your living and work situations this percentage will vary.

The simplest way to make more frequent payments is to pay your loans bi-weekly instead of monthly. By making half a monthly payment every 2 weeks you actually will fit in an extra full month’s payment for every year you are paying back the loan.

While it’s important to pay back your loans quickly, it’s also important to live comfortably. Make sure that you are not stretching yourself too thin and that you can realisticly make these payments ON TIME EVERY MONTH. Missing a payment can mean a lower credit score, this could cause you to have higher rates applied to your loans and a more difficult time getting credit in the future.

One way that you can make bigger monthly payments is by finding a part-time job. This might not sound like the way you want to spend your time, but this could save you so much more than it costs you at the time. Putting your extra income towards your student loans will help you to make bigger payments and saving you thousands of dollars in interest charges.

Budget Budget Budget

However you decide to repay your loans it’s so so important to have a budget that accounts for every expense that you will encounter along the way. This is a life-skill that you will use to plan for your future as well when you start looking at having a home, family and finally your retirement.

Some Simple Ways to Learn About Investments

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It’s important to get professional advice when it comes to your investments, but you also need to know enough to be able to realize when you are receiving quality advice and when you are not. Learning about investing your money, enough to understand the basics, is important for every retiree.

Savings Account

Photo by jonathansin

Subscribe to Financial Magazines

When choosing a financial magazine pick one that gives sound and solid advice. Read every single issue, front to back, for the duration of your subscription.At first there may be some things that you do not understand completely and maybe some words that are new to you, and that’s okay! Take the time to research the things that you don’t understand with a simple Google search!

Learn about investments by taking a course either in person or online

There are a lot of community colleges that offer these. They provide courses with professors that will teach you many things about investments from how to budget your money, to investing for your retirement to buying the right insurance.

Online investment courses are also available. These usually involve clicking through a complete lesson once or twice a week. Learning this way is very friendly to your schedule since you don’t have to invest a lot of time and will help you to feel more confident next time you make a financial decision.

Read a book or two

There are so many books about the topics that surround investments that can help you to reach your specific goals and to understand your investment options. To pick out a book you should look at what needs you have then check out some titles and reviews. You may want to get a book that is more readable when starting out. Something that uses less technical words will be more beneficial to a beginner.

 

Thinking About Downsizing?

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Some thing that many retirees consider is downsizing from their current home, which they likely have a lot of equity in, to a smaller, less expensive, home, town home or condominium. But is this a good idea? Is it wise to downsize?

Realestate retirement plan

Many people consider selling their large family homes, which they have a lot of equity in as part of their retirement plans. When you are ready to downsize it’s important to think about where you will be moving to and which type of home to want to buy for retirement. Many retirees choose to move into condos. As a retired person living in a condo has many advantages that allow them to be worry-free such as no lawn care, snow removal, the availability of a fitness center and pool in some cases and also having the ability to travel at a moments notice since you have less responsibilities centered around your home.

After a decade of record breaking house prices in the greater Toronto area this is an appealing direction that many are moving towards there are endless possibilities. You could even choose to have a cabin near a lake or ocean in a more rural location, no more commute, less maintenance and beautiful quiet surroundings.

One problem with downsizing however is that it may it always work out the way that you would think that it would. In many cases home owners walk away with less money that they had anticipated. For example if you are downsizing from a $400K home to a $300K home there will be little left after real estate and legal fees.

This doesn’t mean that downsizing can’t work for you, if you do it right you can walk away with a nice nest egg that will allow you to do the things that you dreamed of such as traveling.

Be Honest About It

Why are you planning to sell your large family home? Financial reasons? Practical reasons? Have your kids moved away? Is your house just too big? Do you want to move closer to your grandchildren? Do you enjoy travel and it is unnecessary? – these are all good reasons to consider downsizing.

Assess Your Needs

How will you live your daily life? Should you consider a bungalow? Is the convienience of a condo appealing to your needs? Take a look at the activities that you currently participate in and those that you wish to participate in and go from there. Taking a look at what you need will help you determine what you do.

Location, location, location

Decide where it is that you actually want to live. What would you like your retirement to look like? Do you want to be in a rural or urban area? Do you want to be closer to your family? Do you want to downsize to a smaller home or condominium?

Smaller does not always equal cheaper

Depending on where you are moving to you may find that monthly expenses are higher than you currently pay. These trade offs can be difficult to quantify, for example if you are moving into an urban condo with many amenities you might find the condo fees can be very high.

Price it Out

If you are considering downsizing make sure that you have realistic expectations. The truth is that most people will walk away with less than they anticipated.

For example: Let’s say you are moving from a $600,000 home to a $400,000 condo. You would think you’d be left with a whopping $200,000 for your retirement. Then you factor in real estate commissions of $30,000, $2,500 in legal fees, $3,000 in land transfer tax, moving fees of $2,500 and outstanding property taxes of roughly $1,500.

Now subtract any outstanding mortgage you have on your property and factor in any new furniture you may need for your now smaller environment. You may find that your downsizing has left you with a modest $50,000-$80,000.

To get a better understanding of what you can expect real estate agents can be very helpful.

Make a Plan

Financial advisers are excellent people to consult when you are putting together a plan for downsizing your home. They will help you draw up a financial plan that will outline many potential scenarios that can help you meet your retirement goals.

The Top Countries to Retire to in 2013

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Do you love to travel and have dreams of retiring abroad?

If retiring abroad, in a tropical paradise is something you are thinking about here are this year’s top destinations that are the most popular among Canadians and Americans looking to retire abroad.

Ecuador

ecuadorThe people are welcoming and friendly, and the location is a paradise. Ecuador offers temperate mountain villages, sunny beaches, historic colonial cities and towns with many cultural offerings. This country also offers many senior benefits such as 50% off international airfare, for when you want to go back home for a visit.

Above all, Ecuador is such an attractive choice for many retirees because you can really stretch your dollars there. For $1600/month you and your spouse could live a very comfortable lifestyle. These values extend from cost of living to real estate prices. A condominium of the coast of California for example might cost you a million dollars, while, if you chose to buy a condominium in Ecuador, you could be looking at paying as little as $150,000 for a spot on the northern pacific coast.

Panama

panamaPanama offers the world’s best incentive program as part of it’s commitment to attract foreign retirees. This makes it very easy and convenient to get residence so that you can retire here.

Panama city is a vibrant busy city with fantastic restaurants, and great hospitals. It’s a hub for banking and commerce so you will find a great deal of international community there. Like Ecuador you can live in Panama for a low cost. With a budget of $1,700-$2,500/month you can expect to live very comfortably. This price includes housing, entertainment and even housekeeping costs.

Malaysia

Retirement-in-Malaysia3A large percentage of of the population in Malaysia speaks English, which makes it very easy to transition in this country. Although this Asian destination is far away, it is very affordable. In Malaysia on a budget of $1,700/moth you could afford to rent a sea view apartment in Penang with a pool and a gym, have a housekeeper that comes once/week, own a sailboat and eat at restaurants almost every day.