I Think It's About Forgiveness

David and his wife have a $20,000 student loan, and he wants to know how they can best attack it since his wife will be part of a debt forgiveness program that reimburses $2,500 a year for five years.

QUESTION: David and his wife have a $20,000 student loan, and he wants to know how they can best attack it since his wife will be part of a debt forgiveness program that reimburses $2,500 a year for five years. Dave explains how to handle it.

ANSWER: I would pay the proper amount to the student loan people in order to receive the maximum benefit from these folks over five years. Go ahead and pay off that $7,500 difference as fast as you can. Then take the $12,500 and stretch it out over five years.

However, I’d put an extra $12,500 in your emergency fund. So you still have to do your debt snowball, and if she decides to leave that job in a year, you guys can just write a check and pay off the student loan. She’s not wearing golden handcuffs.

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