Your income is vital
Dear Dave,
I actually have $100,000 in student loan debt. Since the amount is so large, is there a special place for it in your Baby Steps plan?
Jules
Dear Jules,
I hope you will have a pleasant big income which you can use to combat the large mountain of student loan debt. However, I actually have seen even worse situations. I’ve talked to individuals who went into $200,000 of debt for a four-year degree in a field where they make $45,000. Yes, this sort of considering and behavior exists, and it’s ridiculous.
The undeniable fact that it’s a considerable amount of student loan debt doesn’t change that. In Baby Step 2, you repay all debts except your property. So don’t let that student loan debt loaf around for years. You must give attention to taking control of your money. This implies that you will have to live with a strict monthly budget that limits only the essentials. After that, start throwing away every dime and penny you possibly can scrape together and save to repay the scholar loans as quickly as possible.
Your income is your biggest wealth-building tool, Jules. You cannot save but plan for the long run when all of your money flies out the door to repay debt.
–Dave
Find money market account
Dear Dave,
My wife and I are completely debt free and saving for our first house. We currently have about $140,000 in savings and would love to purchase a house with money when the time is true. Where should we invest our money in order that it really works for us and we save more at the identical time?
Andy
Dear Andy,
If I were you, and perhaps with a 3 or 4 yr window, I’d just park the cash in money market account. You won’t make much from it, but your money shall be protected. I mean, all you are searching for is a clever place to maintain it for some time.
When it involves investing, I’m a giant fan of growth stock mutual funds. The problem with that in your situation can be the volatility of the market. If you have saved more cash and hung out deciding on a house, the market could also be down.
Financially, you two are doing great in the intervening time. Imagine how incredible it would be to have a brand new home debt-free in a number of years!
–Dave
