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Ask Dave

Taking That Deferment

Is a student loan deferment the right call in Amy's situation?

QUESTION: Amy wants to know if they should take a deferment on their student loans in order to make larger payments on their smaller debts. The $1,200 monthly student loan payments would pay off some of their smaller balances. Dave doesn't see any problem with it.

Dave's ANSWER: There's nothing wrong with it, but it's a pay-me-now, pay-me-later thing. Deferment does collect interest. You aren't really getting away from it. But it does help the cash flow and help to get the debt snowball rolling and give you a sense of accomplishment. I don’t think there’s any big problem with doing that.