Financial Advice For New Graduate
REM #F694
By Ilyce R. Glink
Summary: Pay off the car loan or the student loan? This is a question many recent graduates face. Ilyce gives advice to a reader about how to build a sound financial future.
Q: I am a 25 year old college graduate making aroung $55,000 a year.
I currently have $10,000 in student loans at 5.4 percent and a car loan of
$23,000 at a high interest rate of 9.9 percent because I had no credit coming
out of college.
I have some extra cash at the end of each month. Should I pay off the student
loan or put the extra money towards the car loan?
A: You owe $23,000 on your car at nearly twice the rate of your student loans.
The student loans are (somewhat) tax deductible, but the car loan is not.
Any extra cash you have should go toward paying off your car as quickly as possible.
While you can check to see if your credit has improved enough to qualify for
a lower car loan interest rate (check your credit history and score at www.annualcreditreport.com),
you should plan to get rid of your car loan as quickly as possible.
Once you have paid off your car loan, then turn toward your student loans.
Good luck at keeping your debt under control. There are two things that will
help: Plan to keep your car for at least 10 years. And, consider getting a part-time
second job in order to increase the amount of cash you have coming in right
now.
You don't want to sacrifice your future for today's debts. If you put the maximum
away in your 401(k) for the next 10 years, you'll retire a multi-millionaire.
So, do whatever you have to do bring in enough income to keep your retirement
contributions high while paying off your high-interest rate debt as quickly
as possible.
Good luck, and thanks for writing.
NOTE: This column is distributed by Real Estate Matters Syndicate, PO Box 366, Glencoe, Illinois, 60022. This column may not be resold, reprinted, resyndicated or redistributed without written permission from the publisher.
Revocable Living Trust And A Life Estate Deed
100 Percent Investment Property Loans
Creditors "Charged Off" Credit Account
In-Laws Headed For Bankruptcy Court
Rollover IRA
Link to This Article
Like what you've read? Spread the word! You can link to this article
from your website by copying the following code and adding it to
a page on your website:
Copyright ©2001-2007. ThinkGlink, Inc.
All rights reserved. Reproduction of material from any www.ThinkGlink.com pages without permission is strictly prohibited.
Site designed by Walker Sands Communications
