Quote:
Originally Posted by Xist
Many people tell Student Loans they could not afford their payments and were only paying $50 a month.
Is that a pro-tip or a life-hack?
|
Life-
unhack. Extending out the amount of time it takes to pay off a loan just increases the total amount spent on interest. It makes sense that someone owning a debt obligation would allow a lower repayment amount and longer repayment term. It increases the likelihood that they will receive a payment since the monthly amount is reduced, and it increases the amount of interest (profit) they collect.
Quote:
I am making normal payments and I paid extra when I thought I could spare it. Once I fill out the paperwork they sent me I am taking the relevant information to my bank and asking for a credit limit increase so I can move. My first paycheck will probably not be for a month, but thus far my priorities are:
Paying off my credit card.
Opening a checking account that earns interest: https://www.northpointe.com/banking/...timateaccount/
Paying down my student loans.
|
Good plan!
A few comments:
1. It makes no financial sense to have ANY money in a savings account until all interest-bearing credit card debt is paid off. As long as the interest rate on your checking/savings account is less than the interest rate of the credit card, you are losing money holding it in savings. The exception to this is if you are tempted to spend more when you have more available credit. Another consideration is to apply for a new CC that has 0% APR for balance transfers for the first year (be careful of transfer fees). If you move to a 0% card, then it makes sense to save money in an interest-bearing account and then either pay off the CC at the end of the 0% term, or transfer the debt again to another 0% card.
2. If you have an auto loan or mortgage, it can make sense to get a cash-out refinance (resets the number of months needed to repay the loan). Take that cash and pay down the higher interest credit cards and school loans. Mortgage and HELOC interest payments are tax deductible, and unlike student loans, are forgiven if filing for bankruptcy.
3. Check out a site like
https://www.depositaccounts.com/chec...-accounts.html to find the highest interest rewards checking account.
Many true protips can be found at:
https://www.mrmoneymustache.com/