Buy A House With Student Loan Debt?
Trevor is 31 and just found a job making a decent wage, has $51,000 in student loans, and has no money. He’s thinking about buying a house. Should he pay off the loans first?
QUESTION: Trevor in Bowling Green is 31 and has two college degrees. He just found a job making a decent wage, has $51,000 in student loans, and has no money. He’s thinking about buying a house. Should he pay off the loans first? Dave tells him he’s too broke to own a house.
ANSWER: Lord no, you don’t need a house. You’re broke. You’re making $20,000 a year and you have $50,000 in debt. That house is going to be a curse, not a blessing. You’ve got to get yourself squared first.
You’ve come through a valley, and you’ve got to make a turn now. I really want you to build on solid ground this time. Solid ground is debt free. If I woke up in your shoes, I would be unbelievably aggressive about paying off the debt. I would live on beans and rice and Ramen noodles and be done with this student loan. Otherwise, you’ll wake up 10 years from now and that stupid thing will still be there looking at you. It erodes the foundation of your rebuild.
If I’m in your shoes, I’m going to clean this up and then move up to an emergency fund of three to six months of expenses. Then save a good down payment on a house.