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Ask Dave

The Best Option

Chris has low income, high debt and a pressing question for Dave.

QUESTION: Chris in California makes $600 a month in a part-time job while he is applying for a teaching position overseas. He has three options when paying his $30,000 in student loans and isn't sure which option to go with. Find out why Dave thinks he should pay the minimum payment.

Dave's ANSWER: You don't have so much of a student loan problem. You have a career crisis. We need to get your income up tenfold.

I do think that you are right; you need to pay out the very minimum that you can figure out, whether it's interest-only or deferred. I would keep it deferred and make the smallest possible payment until you get your income going.

As soon as you get your income going, I want you to attack these and pay them off as fast as possible. You don't want to wake up five years from now and have them still here.

But today, if you pay them $10, that's a lot because you're starving to death today. If you get your income to $5,000 or $6,000 a month, don't go buy a car or rent anything that's super expensive. Keep your lifestyle way down and clean the student loan mess up as fast as you possibly can.

For today, the answer is to pay the least you can possibly pay in whatever program that they offer you. That will really help a bunch.