Speeding Things Up

Nicki has two student loans. She makes $22,000 a year. She wants to pay these debts off. Dave thinks she has to get her income up to get ahead on her debts.

QUESTION: Nicki in Louisiana has two student loans. She’s got $4,500 at 4% left on one and $7,200 on the other at 11.75%. Nicki makes $22,000 a year. She wants to pay these debts off. Dave thinks she has to get her income up to get ahead on her debts.

ANSWER: We need to do two things. The first is that you are struggling on the income side of your equation. You do not have a lot of room in your budget. We’ve got to get your income up.

You do that by setting some long-term career goals and reading and growing and learning about a certain trade area that you want to enter into in addition to your degree field or something that further enhances your degree field.

In the short term, you need a part-time job. You’ve only got $11,500 in student loan debt. If you made an extra $1,000 a month for a year and threw it at this, it’d be gone. That’s what I want you to do. You just have to cut back your social life a little bit and get yourself some money. Then this stuff goes away pretty quick.

You can live on $22,000 if you know what you’re doing, but that’s really tight and there isn’t room for $1,000 a month in there. Getting a loan at the bank doesn’t get you out of debt. If you do that, you just move it. It doesn’t get you out of debt. You can’t borrow your way out. It’s an income problem, not an interest rate problem.

Regardless of the interest rate, $1,000 a month makes this go away in about a year. We have to get your income up and make sure you’re on a written budget so that you don’t add any debt to what you’re doing. You need to kick it into gear big time. You have to get really intense and really focused.

You can wander into debt, but you can’t wander out.

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