Hello, everyone and welcome back to a new video. Now, I'm actually a recent college graduate. Luckily, for me I don't have any student debt, but 74 percent of college graduates do come out with student debt there's over one point: five six trillion dollars in student debt in the United States broken up between. I think forty-five million graduates which ends up coming out to about thirty five thousand dollars a student, isn't that insane - and you know what's actually more insane - is that Americans owe half a billion with a B half a billion more dollars in student loan debt than credit Card debt, what insane I know, but the main reason why I'm making this video is because most people go to college, get student loans, graduate college and really don't know what to do at this point.

They don't know when to start paying, how to start paying, maybe ways around it, etc, etc, etc. And the sad part is, is that it just keeps people going down this rabbit hole of never paying off their student loans and they're just borrowing more money. And it's just terrible - and I do want to say that this is not for everyone. But like fourteen point, eight percent of student loans are delinquent, which means like they're not really being paid so today I just want to take a few minutes to fully breakdown student loans and, more specifically, how to pay those suckers off ASAP all right.

So, let's start basic now, there's two types of student loans, the first one being a federal student loan, which essentially just means it's originated by the government and the government is the one funding your student loan. I know we're dropping crazy facts on this channel. You should subscribe, but the second type of student loans is actually private student loans, and these are going to be loans that are granted by bigger banks or by credit unions, state agencies, maybe even the school you went to, etc, etc. The main difference between the two student loans, besides, obviously where the funds come from, is actually the guidelines and restrictions that each have so, for example, a federal student loan always has a fixed interest rate in a fixed repayment plan, whereas private loans are the exact opposite.

You never really know every single loan can be different depending on the terms what you agree do who you went through all sorts of things like that, and I do want to say that the majority of student loans are actually going to be private student loans. So that's what I want to talk about mainly today, but before I actually talk about how to pay these student loans off ASAP. I want to give you a complete full breakdown of the two, so you're a little more informed, all right so federal student loans. Now, you're not gon na be paying on these loans, while you're in school.

Okay, they have like, I said, fixed interest rates and they also offer subsidized loans where the government basically pays your interest while you're still somewhat in school. You can kinda be like a part-time student and they'll pay for your interest, which is cool. You actually don't need a credit check unless you know you're getting like a PLUS loan or something like that. You don't need a cosigner, for these interest is usually tax deductible, which is huge, and it also offers a vast majority of like repayment options.

Forbearance deferment. I've talked about that in a previous video, but you've got those options as well. There's forgiveness, programs and you can even consolidate into a direct loan with one of these now private student loans, on the other hand, are gon na, have variable interest rates, and I've actually seen them up to like eighteen percent, which are insane um. You can actually be made to pay these while you're still in school, which is brutal.

Alright, you might actually need credit for this, though so they're a little bit, maybe tougher to qualify, for you also might need a cosigner sometimes or like a co borrower and the interest might not. I'm not gon na say guarantee, but it might not be tax-deductible on one of these and repayment programs and like forbearance, deferment and all that kind of stuff that they are. They are offered, but it's very limited with a private loan and it's about 99 percent of the time I want to say is that these do not have forgiveness programs and, if you're sitting there going like Sean, why you telling me these things? I really don't care. I just want to get my student loans paid for I don't know what I got it's important to know, because you actually want to look up what kind of student loan that you have or if you're planning on getting student loans and you're, actually not in college.

Yet or you haven't borrowed money yet then it's good to know the two and actually decide on which one you want to go, because that actually changes your strategy, a ton for paying off your student loans, for example, if you have a federal student loan, you might Not even ever need to pay that sucker back so like teachers on one hand, teachers if you teach for five consecutive years in a low-income community, so like the parents of the kids, you're teaching or like just low-income families, you're doing that for five years. You can actually get your loans forgiven. It's like between five to seventeen thousand dollars of your loan. Just poof disappear now.

Private loans, on the other hand, again, are a little bit trickier and you want to actually pay those suckers off ASAP so again. This is why it's important to actually figure out which ones you have via private or federal. If you have federal it's worth taking, you know a little bit of time to research, specifically the program you're in specifically some guidelines for there's actually a few ways to get out of paying your federal loans or even like, maybe going on an income based repayment plan Or something there's a lot of ways to kind of finesse. Your federal student loans so definitely spend the time and research to actually figure out it get strategy for that.

But again, most people have private student loans, which is what I want to focus on so Sean. How exactly do we pay off our student loans before were like 50 years old? Well, I just wan na say that I've seen every trick in the book. I mean I've seen so many different strategies for paying off student loans or really just paying off debt. In general and I've got like 500 friends in student loan debt right now, I've seen about 500 credit reports from clients who have student loan debts.

So while I don't personally have student loan debt, I've seen so many other people, I've seen so many other strategies. I know it works and I know it doesn't now before we go over the best strategies for paying these suckers off, though I do once you break it down into two separate buckets so bucket number one. You just got out of college you're fresh out you're having the start paying on your student loans right you're, like 20 to 23 years old. I don't know whatever you graduated you're, starting fresh on actually paying on your seeing loans and Buckett 2 is gon na.

Be people who have been paying on their student loans for like five to six plus years, they've been out of college from five to six and they're, just sick and tired of paying for their loans and they're. Just like these things are never going away. So those are the two buckets. Well, let's start with bucket number one here, the absolute best way to live student loan debt free when you get out of college is to prioritize okay.

Now, what I mean by prioritize is that student loans, private student loans, that we typically come in, you know two to five different loans. So it's not usually one massive loan. You usually get like, I said two to five different loans, all for different amounts, all with maybe different terms, all with different interest rates, all sorts of things. It doesn't matter that you got 35k worth of student loan debt broken up in multiple different loans.

What I want you to do is prioritize them right start with the smallest and littlest student loan rank that guy at the bottom and then just stack them up the more expensive they get the higher they get on your list. Okay, I want you to prioritize them and then absolutely attack them from the bottom up and a lot of people actually get this wrong. They're, like listen to Dave, Rams you're like they listen to all these, like entrepreneur, a Rich Dad Poor, Dad whatever little like I've heard of this before well, most people aren't doing it correctly. What I mean by attack it is, I want you to make the minimum monthly payment on all of your loans.

Yes, even the smallest one. You want to make the minimum monthly payment on all of your loans at the first of the month, okay and then, as the month goes on, you know you start spending gas money and all this kind of stuff, whatever money is coming out of your accounts and Then, at the end of the month, before the first of the next month, I want you to drop more money on that smallest loan, so you're, essentially paying twice on this student loan you're not like paying a lot up front on this student loan and then making The minimum payments - I don't know, that's not how you live your life because you don't know what you're gon na need that month for expenses and buh buh buh, buh, buh, buh, buh, buh bah. So what I recommend pay the minimum monthly payments on all of your loans on the first of the month, pay your daily expenses, your rent, your whatever ba ba ba ba ba you know all your food and stuff and then once you get to the end of The month, once you have a little bit leftover money from your pay like, let's call it, you know an extra 50 100 200 bucks right. You have some money saved up, you don't like run your accounts dry, but let's say you got an extra 50 to 100 bucks, throw it at that smallest loan.

That is how you actually attack your smallest loan. Okay and you're gon na be paying your loan off way sooner for two reasons. Obviously the first one is because you know you're throwing more money at it, but the second one is because you're saving so much money in interest - and I said this so many times in my lending videos - I'm a mortgage lender in Arizona I didn't know. So I see this stuff all the time, I'm in this stuff all the time and the biggest thing that I always say is the amount of interest that you pay on.

A loan is not usually your rate. It doesn't really matter to some extent of what your rate is. It really matters the term or the length of that loan. I will take a 12 % interest rate on a loan if it had a five-year term versus a 5 % interest rate on a 30-year term.

The savings are absolutely insane. I do not have time in this video to actually go over it. You've just got to take my word for it. You and another thing really quick is the average income of a undergraduate student is about $ 54,000 in the United States, so you should be able to absolutely crush your student loan debt.

So if you're, fresh out of college and you're like I want to get rid of these student loans ASAP, then you need to prioritize, and you also probably shouldn't be adding your avocado to your Chipotle burritos. All time save a little bit of extra money and then absolutely attack that smallest loan avocado debt free now. That strategy can also apply to people who've been out of college for five six seven eight nine years, but I've actually seen some strategies work so much better. For these people and that's what I want to talk about now, so people in bucket number two now again, this isn't gon na be everyone, but for the most part, you're no longer making that $ 54,000 a year at that entry-level position straight out of college you're, Probably making more like 63, maybe even $ 70,000 a year again, this varies a ton based on your career field, but you're gon na be making more money.

Now that's great right! Well, you've probably got more expenses as well. You might be married, you might have a kid, you might have a mortgage payment. Your life is just a little bit more complicated than it was when you got out of college, so it's gon na be really hard to actually just absolutely attack that smallest loan right, because it's just you've got a bunch of debt. It's not just your assumed loan debt anymore.

It's your car payment! It's your mortgage! It's it's your credit card! It's all! This debt and you've like man, I've got so much take care of. I can't focus on these student loans right now, like I just got to make the minimums on those, and I got ta take care of this other debt so for people in bucket number two. I want you to consolidate your debt. This strategy actually works a ton.

I'm talking using something like a pee lock or a key lock I'll talk about them in a little bit, but essentially - and I know I'm gon na lose a lot of people here. So please bear with me, but think of it, like you know, taking all of your debt, putting it into one write, you're, consolidating it all into one think of it like one massive credit card, so you've got your mortgage on there, your car payment, your student loans, You've got all this stuff on one credit card. Okay, you've got this one credit card in every single penny you make that month from your job, 100 % of it goes towards paying this credit card off and again bear with me. But let's your total debt from all these things on this imaginary credit card equals $ 300,000 right.

It's a big chunk of debt. You got a lot of stuff in there. No worries, though, because let's say you make $ 10,000 a month right as you get that paycheck on the first of the month. It goes 100 % towards your day.

So now you owe two hundred and ninety thousand dollars in total debt again bear with me, but your interest calculated on two hundred and ninety thousand dollars worth of debt is actually less than three hundred thousand dollars worth of debt. Now again, it's not crazy. You know it's only a small percentage, but every little penny counts if you've seen an amortization schedule. You'll know what I'm talking about.

If you give like an extra dollar, if you pay an extra dollar on a monthly payment on any type of loan, it's gon na change everything you're gon na pay it off sooner save money, all this kind of good stuff, so every penny counts calculating that interest Based on 290 K versus 300 K is gon na do wonders for you, and people are probably sitting there going Shawn. What are you talking about? I can't take 10 grand and throw it all at my debt like what? How am I gon na pay for anything? I know I know I know okay, so think of it like this. On the first of the month, you owe $ 300,000 well, you actually got paid that day for 10 grand. So it goes towards that card now, yo $ 290,000, but you still got ta pay for your gas that month and your groceries and you know whatever else you want to buy so then your debt starts coming back up.

You now no longer owe 290 K, but after about a week or two now, you owe about 293 K right, cuz you're spending that money you're spending money on your your groceries, your avocado. So by the end of the month, you might be back up. Let's call it two hundred ninety six thousand dollars worth of debt now, if you're, all the way back up to three hundred thousand dollars, then usually just stop watching this video, because that means you're spending 100 percent of your income every single month and you will not Survive like literally you're, probably not gon na live very long, but in most cases you're gon na owe less right, which is great now. A lot of people at this point say well Shawn.

What's the difference in getting set up with this, he walk or pee walk like that's. Basically, what I do I make my debt payments every month and I pay for my avocado and all other stuff and then whatever is left over in the bank is called my savings like that's normal and yeah. I get that, but this strategy that I'm telling you will save you so much more money because your interest is being calculated nightly. Alright, so, like I was earlier, your interest is calculated on day 1/4 at $ 290,000 amount.

Then day, two call it two hundred and ninety thousand dollars and five hundred bucks and you're slowly paying money right, you're, slowly, racking your debt back up, but again your interest is being calculated based on how much you currently owe big emphasis on. Currently, I still feel like I didn't do a great job explaining this, because most people find this stuff so confusing, but again think about this imaginary credit card right, you're gon na get charged based on how much you currently owe well, if you owe less at the Beginning of the month, you're gon na get charged a lot less on that interest payment and again, as you use it, you're gon na get start charging more and more, but you're saving tons of money. This way, you're saving, tons and tons of money. Like literally what I was just saying about an amortization schedule, it's a little progress.

It's a little bit of money, but you're saving a little bit of money every single day, every single day, every single day. It's a huge snowball effect to where, once you're 8 years down the line, you're saving thousands - I mean literally tens of thousands of dollars. I've seen people save tens of thousands of dollars and pay off their student loan debt and all their debt really in a much shorter time than what the term is on that loan and again, this is with a pee lock, a personal line of credit or the More popular options, what I recommend, if you can, is a HELOC, a home equity line of credit. Now again, I view mortgages in Arizona, so I've done key locks for clients and basically consolidates debt all into your home.

If you don't own a home, then you can't get a HELOC. You got to go for a pee, lock personal on a credit. Obviously, amounts on a HELOC are much much much higher. If you want to learn more about like this specific key lock and how it kind of works, I've made a video on this channel previously I'll leave it linked down below for you to kind of check it out.

But again, this is how you consolidate your debt into one line of credit, this imaginary credit card, not one big loan, because I've seen people do that interest rates on a massive personal loan is like 15 to 20. Do not do that. Do not go get a personal loan, I'm talking about a line of credit, this imaginary credit card, but that's really it I mean paying off student loan debt shouldn't be as hard or as stressful as it currently is problem is most people are just not educated this. They end up making their minimum payment if they even make a payment at all, and it's just this super long rabbit hole of paying off debt and it just takes forever and no one's doing it effectively.

Bottom line you just got to get ahead of your student loan debt, take the necessary steps to actually be in front of it and you'll be good to go. Hopefully this video helped you. I will say that being student loan debt free. However, you want to say that being debt-free essentially is an amazing feeling and again it's totally worth not getting avocado on your Chipotle burrito.

But if you enjoyed this video or learn something new, then please actually share this video with someone who's in your shoes who, you know, has student loan debt and they need some help getting out of it. I'd really appreciate, if you share this video also like and subscribe on this video or subscribe to this channel, I dropped tons of great information. That'll help you out with things like this. I love dropping financial knowledge of once in a while.

Most people have no idea. What's going on when it comes to debt or when it comes to other things, so I like to help out when I can oh - and I also made a video on how to actually buy a home when you are in student loan debt, so I'll. Leave that link down below as well but again, I hope you enjoyed the video like subscribe. All that good stuff drop, a comment for me and until next time I will see you in the next video.